SODA SPRINGS, Idaho — The major tax issues for growers in 2014 will be diminished write-offs for equipment purchases and consequences of the Affordable Health Care Act, according to one farm tax expert.
Jerry Brown, a Certified Public Accountant and an Idaho Wheat Commissioner from Caribou County, is scheduled to lead an hour-long webinar at 7:30 a.m. Jan. 23. Participants in the Idaho Wheat Commission-sponsored webinar may log on at http://connect.cals.uidaho.edu/wheat.
Webinars are later posted at www.idahowheat.org.
Tereasa Waterman, the commission’s information and education manager, said a second webinar will be scheduled with Brown if time runs short.
“He specializes in farm taxes. He’s one of the few experts in focusing just on farms,” Waterman said.
Brown, a wheat and barley farmer, believes a reduced Section 179 equipment deduction is the big tax issue facing farmers this year.
In 2013, growers seeking to offset large profits were allowed to declare up to $500,000 in equipment purchases in a single year. This season, the deduction is reduced to $25,000, leaving farmers to take depreciation over seven years.
Brown said the intent of the deduction was to stimulate equipment purchases. The deduction motivated Brown to buy a tractor last year, about three years earlier than he would have done otherwise.
“I was talking to my dealer the other day, and he’s quite concerned about what it might do to business,” Brown said.
Brown anticipates big farm equipment companies will wield their influence and “Congress will increase that $25,000 to something higher.”
While Section 179 applies to new and used equipment and both state and federal taxes in Idaho, the state’s growers also had the option to write off up to half of new equipment purchases on 2013 federal taxes as “bonus depreciation.” Current policy allows zero bonus depreciation this year.
Beginning this year, the new federal health care act requires everyone who doesn’t have adequate minimum insurance to pay $95 for each adult on the return and half the amount for every child, or 1 percent of household income if that amount is greater.
Brown emphasized the IRS has no ability to charge interest or use liens to collect that money, and he suspects many people won’t pay the insurance tax.
Requirements for large employers to have minimum insurance coverage have been postponed until 2015. Employers who don’t meet the requirement by then must pay a fine of $2,000 per employee.
Subsidized healthcare will be available through new insurance exchanges — for example, to families of four earning below $92,400. Brown cautioned income for calculating subsidies is based on prior-year earnings, and farm incomes tend to fluctuate, which could result in growers having to repay subsidies during good years.
Brown intends to push more of his clients to take advantage of a medical reimbursement plan for spouses they employ. The arrangement allows a farmer to declare medical expenses for a spouse and children, including deductibles, without having to itemize.