Elk Grove, CA Accountant for Farms and Agriculture

Cook CPA Group

Farming is a unique industry because it is not always stable and depends on many factors. The fickle circumstances surrounding the farming industry make it imperative that farmers have thorough and inclusive accounting practices.

The accountants that work with Cook CPA Group are able to provide farmers with the accounting services they need to ensure financial health so they can focus on creating a quality agricultural product. They encourage you to get in touch today for more information about their accounting services. You can schedule a free consultation at any time. Contact the accountants that work with Cook CPA Group by calling (916) 259-5496 or visiting their website today.

Understanding Government Subsidies

Understanding and acting in accordance with government subsidies offered to farmers is a large part of the job of a farmer. The goal of these subsidies is to help promote the success of farmers during years that are less prosperous, to encourage the production of certain kinds of crops, and to maintain a balance of supply and demand of crops.

It’s important for farmers to know which crops are subsidized so that they can factor them into their overall accounting strategy. This is especially important if subsidies are made as direct payments to farmers. Subsidies for farmers can come in various forms, including:

  • Insurance – This form of subsidy covers the cost of insurance premiums for farmers and is the largest area of subsidies offered to farmers. These insurance policies are available for over 100 crops, though wheat, corn, cotton, and soybeans are the most common. Insurance is offered to everyone, without income limits.
  • Price Loss Coverage – This type of subsidy is paid to farmers based on the average national price of a crop in comparison to a reference price that is set by Congress. Payouts to farmers are larger if the difference between the crop’s national price and the reference price is larger. This program covers more than 20 types of crops.
  • Disaster Aid – Disaster aid programs can benefit almost all types of farmers that have had their crops damaged in natural disasters. The amount of funds that are distributed is set by Congress.
  • Agriculture Risk Coverage – Also known as ARC, this type of subsidy is offered to farmers if their revenue per acre falls below a certain guaranteed level. It covers more than 20 crops.
  • Conservation Programs – Conservation programs exist to improve the conditions of farm land that is used for production; the most common is known as the Conservation Stewardship Program. A similar program, known as the Conservation Reserve Program, takes land out of production.
  • Marketing and Export Promotion – This subsidy covers the cost of farm and food promotion activities.
  • Marketing Loans – As a price-guarantee program, marketing loans allow farmers to hold their crops so they can be sold at a higher price at a later time.
  • Research – Scientist and other experts are paid by the government to perform research, development, statistical analyses, and economic studies on the farming and agriculture industry.

Deductions for Farmers

Farmers qualify for many advantageous deductions on their taxes. An accountant that works with Cook CPA Group can help farmers identify and file for these deductions. Farmers may qualify for deductions for the depreciation of the value of farming machinery and other agricultural equipment, storage and warehousing, expenses of seeds and plants, medical costs for livestock, the cost of fertilizer and lime, and interest added to their mortgages.

Farmers should note that there are other deductions that they may not qualify for. These include living expenses related to the farming industry, expenses for raising personal livestock, the value of livestock that have died and other forms of inventory and personal losses.

Another important deduction that farmers qualify for is the home office deduction. If part of a farmer’s home is used to support their farming business, then they are able to deduct the cost of maintaining their home office. A home office only qualifies for deductions if a portion of the home is used exclusively for work related to the maintenance of the farm.

Many farmers may also qualify for a fuel credit. If gasoline or fuel was used for farming purposes, then farmers may be able to claim a refund or credit their taxes. (Dyed diesel and kerosene do not qualify.)

Other Accounting Services for Farmers

An accountant can assist farmers in determining whether their business is considered to be farming by the IRS in the first place. According to the IRS, a farmer is someone who manages, operates, and/or cultivates—either as an owner or a tenant—a farm. “Farm” is defined loosely, as either a ranch, range, grove, or plantation. A farm can produce fruits, vegetables, livestock, poultry, or fish.

Identifying and reporting streams of income, of which there are often multiple for farmers, is another service that accountants can provide. Income streams that farmers must report include sales of products, distributions for cooperatives, crop disaster payments, crop insurance proceeds, agricultural payment programs, and tax credits and refunds for gasoline and fuel use.

Elk Grove Accountants for Farmers and the Agricultural Industry

An accountant with Cook CPA Group can put their expertise to use to assist farmers with all of their accounting and recordkeeping needs. Get in touch with them as soon as possible to learn more about how you can manage your money for greater financial health. Call (916) 259-5496 or visit the Cook CPA Group website today for more information.

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