Before sitting down to prepare taxes, South Dakota's agriculture producers need to review some changes that have been made to the Farmers and Ranchers Tax Guide published annually by the IRS (publication 225).
"Tax rules and regulations change annually, so it is important for producers and tax professionals to stay up to date," said Shannon Sand, SDSU Extension Livestock Business Management Field Specialist. "These changes to the tax rules and regulations for 2017 can have some significant impacts on a producer's ability to plan for the next year and beyond."
- Disaster relief for Hurricanes Harvey, Irma, and Maria
- Standard mileage rates
- Increased section 179 deduction limits
- Disaster losses
- Maximum net earnings for social security
- Qualified small business payroll tax credit for increasing research activities
Standard mileage rates: The Standard mileage rate for operating motor vehicles has changed to 53.5 cents per mile.
Expense deductions: One of the most significant changes in the guide is the 179 deduction expense that allows for producers to deduct up to $510,000 of applicable property when put into service in 2017.
"Given the changes in the commodity markets in the last couple of years it will be especially important for producers and their accountants to work together and create a tax plan that fits each producer's individual needs," Sand said.
More details on 179: The maximum amount a person can choose to deduct for most 179 property put into service in 2017 is $510,000 (where as in 2016 it was $500,000).
A new section D has been added to form 4684 to make an election to deduct a loss attributable to a federally declared disaster in the tax year immediately before the disaster year.
The maximum net self-employment earnings subject to the social security part of the self-employment tax (6.2 percent) is $127,200.
There is no maximum limit on earning subject to the Medicare part of the tax.
For tax years following December 31, 2015 A qualified small business may elect to claim up to $250,000 of its credit for increasing research activities as a payroll tax credit against the employer's share of social security tax in the first calendar quarter beginning after the date that qualified small business filed its income tax return.
January 31, 2018 deadline
Both paper and electronically filed W-2 and W-3 forms must have been filed with the Social Security administration by January 31, 2018.
Both paper and electronic files of 1099-MISC that report non-employee compensation must have been filed with the IRS by January 31, 2018.