The Tax Cuts and Jobs Act (TCJA) passed in December of 2017 was heralded as a tax simplification. While that may be true for an individual who earns a paycheck and little else, the reality is, for an agricultural business owner, the TCJA made things more complex. Having an experienced CPA preparing your taxes is more important than ever.
If you don’t have a tax preparer or are not confident that your current preparer has the experience necessary, it’s time to start looking. Be sure the firm you choose has the industry knowledge and resources to provide the most benefit for your business’s bottom line.
Once you have selected the right preparer, it’s time to consider what you need to prepare for your tax appointment. Most tax forms you need to provide to your preparer should arrive by January 31; however, there are other documents you can gather ahead of time. The old saying “the early bird gets the worm” is often true with tax preparation. The sooner you get your documents gathered and sent in, the quicker your preparer is going to get your taxes completed and back to you.
To avoid a lot of back and forth with your preparer, it’s also important that the information you are providing is accurate and complete. If you gather all the required documents and submit them together, it will take less time for your preparer, which should be reflected in the final bill. However, if you are waiting for a K-1 or brokerage statement that always arrives late, go ahead and get the rest of your information to your preparer, who can add those pieces when you receive them. And note that no matter how carefully your documents are put together, your preparer may still have questions.
Below you’ll find a list of common items that are important to provide your preparer:
- Prior three years of tax returns (if you are using a new tax preparer)
- QuickBooks, or other bookkeeping reports, reconciled through the year-end (if providing an electronic file, be sure to provide the applicable username and password)
- Bank statements for year-end (reconciled)
- Equipment, or other business assets, purchase documentation
- Equipment, or other business assets, disposed of (if you traded it in, what was the trade-in value?)
- For livestock transactions, designate as raised vs. purchased and breeding vs. held for sale
- Inventory count at year-end (this includes type and quantity for commodities on hand at the end of the year as well as breeding livestock)
- Open contracts for commodities
- Statements showing balances for commodity-trading accounts
- Crop insurance proceeds, including the date and cause of claim
- Loan documentation with year-end balances, including CCC loans
- Gallons and type of fuel purchased for off-highway use on the farm
- Charitable contribution receipts
- Tax documents (Forms 1099, 1098, K-1, 943, etc.)
- Succession planning, gifts and change of ownership throughout the year
While the TCJA didn’t make it possible to file a return on a postcard, a little upfront planning can make all the difference in whether you have a successful and easier time preparing your taxes. Nobody likes tax-time but being prepared early will certainly make the experience more enjoyable. We’re ready to help you, contact us today.