I F A R MANAGEMENT 1992 TAX CHANGES Alan W. Strode Farm Management Agent Chester, Lancaster Counties Tax season is upon us with that emotionally draining job of orga nizing your tax return information for later use in preparing your return. If you are a fanner, or you pre pare even one farm tax return, now is the time to pick up your 1992 Farmer’s Tax Guide, IRS Publica tion 225, at your local Cooperative Extension office. The Farmers tax guide is an invaluable guide to helping any farmer or tax preparer understand farm taxes. No major tax law was passed in 1992, so the changes for 1992’s taxes are few and minor. The changes that did occur were the result of indexing due to inflation, new revised IRS interpretations of present tax code, or the expiration of existing laws. A few of these changes include; Exemption, Standard Deduction Changes, And Itemized Deduction Changes The personal and dependent exemptions is increased $l5O to $2,300 per individual. The rate for • Agricultural • Commercial • Residential (5’ High - SCS Approved) • Retaining Walls • Bunker Silos • Manure Storage, Etc. LET OUR EXPERIENCE WORK FOR YOU-ESTABLISHED SINCE 1979! WE ORIGINATED THE CONCRETE SYSTEM! Sizes And layouts To Your Specifications We Work Hard For Customer Satisfaction! 1993 will be $2,350, The basic standard deduction for married filing jointly is $6,000, which is $350 higher than last year. The extra standard deduction allowed when a taxpayer is 65 or older, or blind, is up $5O to $7OO for married taxpayers and $9OO for singles. IRS will now accept certain financial account statements as proof of payments made by check, credit card, or electronic funds transfer. Business Deductions /Taxes The standard mileage rate for 1992 is $.28 a mile for all business miles on passenger automobiles, vans, pickups, and light duty or panel trucks. You can deduct, as a farm busi ness expense on schedule “F” the cost of preparing that part of your tax return relating to your farm business. Ask your tax preparer for an itemized bill so you know the exact cost of your shedule D, F, SE, 4797, 2210 F, 4562, 6251 and other farm-related tax schedules. You can deduct the remaining cost of lax preparation as an item ized deduction on schedule A as a miscellaneous itemized deduction subject to a 2 percent floor, if you have enough expenses to itemize your deductions. The self-employment tax rate on net earnings for 1992 is 15.3 per cent. This rate is a total of 12.4 per INC. 430 Concrete Ave., Leola, PA 717-656-2016 cent for social security (old age, survivors, disability insurance) and 2.9 percent for medicare (hos pital insurance). In 1992 the maxi mum wages subject to social sec urity portion is $55,500 and $132,200 for the medicate portion. For 1993 the base amounts increase to $57,600 and $135,000, respectively. The 25 percent deduction for medical insurance costs for all self-employed persons which was to expire on December 31, 1991, was extended through June 30, 1992. So you will only be able to deduct 25 percent of your insur ance premiums for the first half of 1992. Kiddie Taxes The tax on unearned income, which is interest or dividend income of children under age 14, kicks in at $1,200 for 1992. an increase of $lOO. This represents a standard deduction of $6OO for unearned income with the next $6OO being taxable at the child’s lax rate. Sold or Exchanged A Farm? If you have purchased or sold a farm you should sit down with the seller or purchaser and file a form 8594. This form signed by both the seller and buyer establishes the allocation of the farm sale price into its components of land, farm buildings, farm machinery, per sonal residence, and tenant house. This way both the buyer and seller will use the same value for each component of the sale. This form should be filled with your tax return by both the buyer and the seller. If you take part in a like kind exchange of property, you must file Form 8824, Like Kind Exchanges forth, in addition to Schedule D, Form 1040. Authorized Dealer For KEYSTONE CONCRETE PRODUCTS • H-Bunk» • J-Bunks • Trench Silo Walls • Hog & Cattle Slats Capital Gain Taxation The maximum income lax rate on net capital gains remains at 28 percent. Remember this capital gains profit is added in with all other taxable income sources, so some gains may not be subject to lax and the first $35,800 of taxable income is taxed at the 15 percent rate for a married filling jointly couple. The 15 percent bracket goes to $21,450 fora single individual and $28,750 for a head of household filer. Special Farmland Use Evaluation A recapture of federal estate and Watershed Project WEST CHESTER (Chester Co.) Pownall Jones, Tough kenamon, chairman of the Chester County Conservation District, an nounced an extension of the high ly successful Red and White Clay Watershed project. This project, started in 1990 in southern Chester County, has re sulted in the installation of more than $390,000 worth of best man agement practices (BMPs) on farms within the watershed to im prove water quality in the streams and water courses in the area. In addition, three demonstration farms were established where in terested farmers can visit to see the BMPs in action. The demon stration farms are Barclay Hoopes farm, Landenburg; Modem Mush room Farms, Kennett Square; and Guizzetti & Son’s farm, Avon dale. (HAYOUSTER Tub Grinders OF SOUTH DAKOTA, INC 25 Years of Grinding Experience For all Types of Hay & Grain Grinding GRINDING HAY reduces waste allows mixing with feed grain makes poor quality hay more palatable Haybuster High Capacity tub grinders make grinding Hay fast and affordable. Compare HAYBUSTER. Two models to chose from. Special Features electronic governor supreme hardened hammers self-contained hydraulic large cylinders system to screen sizes Sh your Haybutttr Dealer or contact: (HAYBUSTER Manufacturing, Inc. P.O. Box 1940, Jamestown, North Dakota 58402-1940 Phone (701) 252-4601 KNOTT & GEISBERT, INC. 3432 Urbana Pike Frederick, MD 21701 301-862-3800 Lancaster Farming, Saturday, February 6, 1993-C3 gift tax occured when land valued under IRS Code Section 2032 A (Special Farmland Use Evalua tion) was cash rented by the dece dent’s heir, a son or daughter. The “qualified use” ended when the cash rent started. Those who inherit property sub ject to IRS Code Section 2032 A must be financially “at risk” and “materially participate in the man agement of the farm.” So slop by and pick up your 1992 “Farmer’s Tax Guide” at your local cooperative extension office. The guide is an invaluable help and, best of all, it is free. Extended Jones said that an additional $50,000 is available to develop two new demonstration farms. Once the farms are selected, a wa ter quality management plan will be developed for each, and BMPs needed will be installed. A sign-up period will be held throughout the month of February. Interested mushroom farmers should contact Dan Greig, district manager at the conservation dis trict office, (215) 696-5126 1 Jones said that Robert Francis, West Chester, has been named co ordinator of the Red and White Clay Watershed project to work with farmers and others in pro viding information and planning assistance as needed. Francis can also be reached by calling the con servation district office or (215) 296-3564. OR CALL: AGRI-QUIP CORP. 1-800-228-8032 Haybutltr mtnuftclunt quHUy Orlndtt s * omit • Rock Ptcktra • Big Balt Butltrt • Hty Slaektrt DEALERS G.H. RINEHIMER MESSICK FARM q J® J