There are national income taxes.
There are national & state fuel taxes.
There are state/local income taxes, sales taxes, and real estate taxes.
There is social security tax.
Farming is abouyt balancing your income with your expenses so you gain assets wen you reite, but not ever showing much profit. these taxes will get you if you do....
In some areas real estate taxes are lower if you use the land for ag purposes. Can save a bundle if this is allowed & you live in a highpdollar development area. Local/state laws, so you need to check with your local courthouse. Typically you need to sell arouynd $2000 per year to qualify, but depends on location.
For income taxes, you need to save proof (receipts) of all your farm-related expenses, and deduct the current expenses (feed, seed, fert, things used up in a year); mid-term expenses (tractor, wagon, etc) deducted over a 5-7 year period; long term assets (machine shed, barn, well, etc) over a 20 year period.
You need to have a business plan & a plan to make some profit with your farm. It uised to be if you showed a profit 2 or 3 out of 5 years you were good, otherwise you were just a hobby. But that's changed, now it depends on your business plan. They do _not_ allow you to always lose money in farming to offset your other income. That is considered a hobby then, & you can't ever show a loss then.
Many states have a lower or no sales tax on stuff you buy for use specifically for farming. This can be simple or complicated, depending on your state. The items allowed don't always make sense, but check out your state.
Since you need to show a profit on your farm once in a while, any profit you show will bwe hammered by social security tax - you get to pay the full 15% on it because you are self employed.
That's a real brief overview. I've done the explination of income & deductions better & longer in the past. If you are getting into farming where you make more than a couuple grand, a good CPA versed in ag taxes is _well_ worth the $400 a year to prepare your taxes, perhaps have a meeting early to set thing up smoothly. They can set up those 3 different lengthdedpreciation scghedules to help you the most - is is possible to take some of the mid.longf term deductions early, and so forth. A good CPA for farm taxes is one of the best hired hands you can get on the farm...... They'll save you more than that on taxes.
--->Paul
