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Ried#3
Contributor

Tax Question

This is my first year farming.   On your return does your schedule F have to go along with your 1040 or can you do it as seperate returns?  

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13 Replies
jc217
Frequent Contributor

Re: Tax Question

It is attached to your form 1040

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Jim Meade / Iowa City
Senior Contributor

Re: Tax Question

If you're asking this basic a question, I would be a lot of money that it would more than pay you to take your taxes to a good, ag CPA. Ask fellow farmers who they use, check with the bank, etc. Doesn't have to cost a tone of money but don't be surprised at $300-$500 for a small beginning farm. You'll surely save that much money in what they can find for deductions, I'd be willing to bet. A CPA fee is among the best money I spend every year.
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wt510151
Senior Contributor

Re: Tax Question

When does it not pay to hire a CPA to do taxes? Do you give him a list of the figures segregated by income/expense category? Or do you give him all of the amounts of money transactions?

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kraft-t
Senior Advisor

Re: When do you hire a cpa?

When you are uncertain about what you are doing. Now you may have a very simple tax return and not require a highpowered professional to do your return. From your questions I accertained that you might be a little ignorant about the process and what is required. Thus I urge you to speak to a professional and let him get you started right.

 

If you have a simpletax return you may think it costly but you will be educated about the process and learn how to do it right.

wt510151
Senior Contributor

Re: When do you hire a cpa?

I find your post offensive. I can divide my income/expenses correctly into the different categories as shown on Sch F as well as on other schedules. Then I give my cpa the list of the amounts for each category and get the 1040 return (done with a computer program). If you are doing the bookkeeping work of the cpa by giving him the added amounts, what is his worth for a simple farm return? A degree doesn't mean that he is less fallible than you.

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SWW&Wind
Member

Re: When do you hire a cpa?

Have been farming since 1950 and also was a real estate agent and sold ranches for over 25 years and had to obtain information from the seller's accounting and was shocked at the terrible accounting and tax reporting.  In some cases they had paid large tax firms as much or more than a CPA would charge and in many cases it was fraud.  I would have them go to a CPA so they would know what they would have after I sold it and to keep them out of tax court.  Never had one object.

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kraft-t
Senior Advisor

Re: When do you hire a cpa?

Ok, think what you want. 

 

You have read Jake of southern Iowa graciously give out pointers on tax returns and the like. He is not only a CPA but a student of the tax code and follows the rulings of the tax courts so that to be informed to better serve his customers.

 

Yes I do my own book keeping and supply the necessary information prior to the end of the year.. The CPA tells me where we stand income wise as of that specific date and I am told how to balance income and expense for the rest of the year. Yes I think he is expensive but the result is worth the extra cost.

 

I don't pay a CPA for filing out my tax form. He does that be he also understands tax law and advises me on which tactics to use. In other words I am paying him for what he knows not for what he does.

 

BTW I don't know why you think my post was offensive. You indicated in your post that you were unsure of what you were doing. I assumed you needed help. I guess you are trying to convince us that you cand do it just as well and save money. I was mistaken in thinking you wanted advice instead you were making a statement. 

 

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wt510151
Senior Contributor

Re: When do you hire a cpa?

Calling me ignornat is offensive to me. Assuming I didn't have a cpa and didn't know what I was doing was too. What I really wanted to know was whether in others' operations the cpa should have all of the information (what is your vague term of necessary?) or just the figures you give to make a tax return. It is called "asking around," and "comparing apples to apples." I can add the numbers to estimate potential tax burden before the end of the year. If I knew how to do depreciation schedules, I would simply do the tax return myself . .Just trying to crunch the numbers whether a cpa is a necessary expense for my small farm or not. Even if prices are good shouldn't keep us all from keeping a sharp pencil on the budget sheet.

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Jim Meade / Iowa City
Senior Contributor

Re: When do you hire a cpa?

I think wt50151 and kraft-t are talking past each other and taking offense where none is intended.  Too bad.  Words on paper sometimes make trouble that wouldn't happen if we were talking in the same room.

To answer the question, I give the CPA all numbers that have anything to do with taxes.  I may chat with him a little about  the tax implications of business planning, but I don't use my CPA as a business planner.  Even though I use him mostly as a tax man, I trust him to be more up to date on what is allowed and permissable than I could ever be, plus, he'll represent me if I get audited.  My annual CPA bill is about $500 and I feel it is well worth it.  He has saved me several thousands a year in the past 3-4 years, more than paying his cost.