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.
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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
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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.
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Phone (701) 252-4601
KNOTT &
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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 <oeno EQUIPMENT, INC..
Berwick, PA 18603 Rheems Exit Route 283,
717-752-7131 Elizabethtown, PA 17022
717-367-4319
Farmers
Tax Guide