Agricultural producers have until March 3, 2014, to file their 2013 income tax returns without penalty if they have not made estimates.
“Producers have until April 15 to file without penalty if they have paid their estimated tax by Jan. 15,” says Ron Haugen, North Dakota State University Extension Service farm economist.
Items to note for 2013 income tax preparation:
New for 2013 is an additional Medicare tax of 0.9 percent on wages and self-employment income in excess of a modified adjusted gross income of $250,000 if married or $200,000 if single.
New for 2013 is a surtax of 3.8 percent on net investment income (includes interest, dividends, capital gains, annuities, royalties, rents and pass-through income from a passive business). The tax is on the lower of net investment income for the year or the amount where the modified adjusted gross income exceeds $250,000 if married or $200,000 if single.
The 179 expense election for 2013 is $500,000. Generally, the 179 expense election allows producers to deduct up to $500,000 of machinery or equipment purchases for the year of the purchase. There is a dollar-for-dollar phase-out for purchases of more than $2 million. It is set to revert to $25,000 plus an inflation adjustment for 2014.
The additional 50 percent first-year bonus depreciation provision is in effect for 2013. It is equal to 50 percent of the adjusted basis after 179 expensing. It only applies to new property that has a recovery period of 20 years or less. It is set to expire after 2013.
The standard deduction is $12,200 for those who are married and filing jointly. The deduction is $6,100 for singles.
The personal exemption amount is $3,900.
Long-term capital gains and qualified dividend income is taxed at a 0 percent rate for individuals in the 10 or 15 percent tax brackets and at 15 percent for those in the middle brackets and 20 percent for those in the top income bracket.
The annual individual retirement account contribution is $5,500 for 2013 or $6,500 for individuals 50 or older.
The annual gift tax exclusion for 2013 is $14,000.
The 2013 Social Security wage base is $113,700.
The business mileage rate for 2013 is 56 1/2 cents per mile.
Crop insurance proceeds, if received in 2013, may be deferred to 2014 if you qualify. You must use cash accounting and show that, under normal business practices, the sale of damaged crops would occur in a future tax year.
A livestock deferral can be made by those who had a forced sale of livestock because of a weather-related disaster.
Remember that qualifying farmers can elect to compute their current tax liability by averaging, during a three-year period, all or part of the current year’s elected farm income. This is done on Schedule J. North Dakota farmers who elect to use income averaging for federal purposes also may use Form ND-1FA, which is income averaging for North Dakota income tax calculations.
Information on agricultural tax topics can be found in the “Farmers Tax Guide,” publication 225. It is available at any IRS office or can be ordered by calling (800) 829-3676. Any questions about these topics or further updates should be addressed to your tax professional or the IRS at (800) 829-1040 or http://www.irs.gov. Call the North Dakota Tax Department at (877) 328-7088 or go to http://www.nd.gov/tax/ for answers to North Dakota income tax questions.