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The IRS Requirements for Filing Farm Status

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As a farmer trying to file your taxes, you're in a unique position. Farms cultivate such a wide variety of items, from livestock to plants used for food or manufacturing, that a definitive description for the word "farmer" would be near impossible. Luckily, the Internal Revenue Service has set down guidelines to help you file your taxes properly.

IRS Definition of "Farmer"

According to the IRS, you're a farmer if you "cultivate, operate, or manage a farm for profit." You can own the farm or rent it, and the definition of "farm" includes orchards, plantations, ranges and ranches.

Maintain Financial Records

While the IRS doesn't ask for specific records, you must be able to show an accurate picture of your finances for the year. You should keep any and all records that show your income, your expenses and your credits. These include sales receipts, ledgers, and invoices. Some particularly important records the IRS suggests you keep are bank and credit card statements; receipts for equipment, transportation, and travel; employment records for anyone who works for you; and fuel receipts.

File Proper Tax Forms

Report your farm income on a Schedule F (Form 1040), "Profit or Loss From Farming." Income from sales of livestock that you raised or bought specifically to sell for profit must be reported on Form 4797.

File All Income Obligated to Report

As a farmer, you have to report most government income you receive, such as payments made for conservation and counter-cyclical programs. Commodity Credit Corporation Loans do not have to be claimed as income unless you pledged part of your crops to get the loan in the first place, in which case the loan is reportable income. If you received money for land under the Conservation Reserve Program, it is reportable income and must be included on the Schedule F. For an exhaustive list of income you are required to report, see the current Farmer's Tax Guide -- Publication 225 -- published by the IRS.

References

About the Author

Desdemona Delacroix has been working as a freelance author in her spare time since 2000, writing short do-it-yourself and current events articles. She holds a Bachelor of Science degree in psychology from the University of Maryland University College, and she occasionally offers tutoring services in writing to undergraduate college students.

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