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Should Farmers Pay Quarterly Estimated Tax or File by March 1st?

Dec 04, 2018

Which tax guidance is correct: Farm tax returns are due March 1? Or, farmers are required to pay quarterly estimates?

As it turns out, both tax principles are right.

Most people pay their taxes as they earn their income, either through an income tax withholding from their wages or by paying quarterly estimates if they are a W-2 employee. However, there is a special provision for folks that earn more than two-thirds of their income from farming. The provision gives farmers a choice: They can pay a single estimate by January 15 of the following year (a fourth quarter estimate), or they can file and pay their taxes in full by March 1.

Tax season is all year long

In recent years, it’s been problematic for farmers to file and pay taxes by March 1 for a variety of reasons. Many brokerage statements are not received before March 1, and when they are received, many of them are subsequently amended.

In addition, the IRS doesn’t always release final forms by March 1, especially if there have been changes in the tax law. (And a magnitude of changes went into effect in 2018.) The final regulations and guidance can be issued well into the following year. That means you could have to file an amended return to take advantage of a provision or comply with a requirement.

These issues make a strong case for year-end tax planning with a professional, especially considering the tax code changes made by the Tax Cuts and Jobs Act (TCJA). Even more so, tax planning and advice should be revisited regularly, not just as an annual event.

How Wipfli can help

It can be hard to keep up with changes in tax law and provisions that affect farmers. We don’t want you to miss any potential tax savings. Work with Wipfli’s agribusiness and tax specialists to protect your hard-earned assets. We can help you calculate accurate tax estimates and create a compliant tax strategy for your business.

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Ryan Tangedal, CPA
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