S AVE M O N E Y WI T H 7 YEAR-END
TAX PLANNING TIPS BY DARCY MAULSBY
A
s the end of the year draws near, now’s the time for farmers to review current tax laws. As the Iowa Soybean Association works hard to ensure checkoff dollars are wisely invested, it’s imperative to maximize your other financial interests, as well. “So much has changed in the past year, from the way Paycheck Protection Program (PPP) loans impact tax returns to new rounds of Coronavirus Food Assistance Program (CFAP) payments,” says Kristine Tidgren, director of the Center for Agricultural Law and Taxation at Iowa State University. “Knowing more about these issues will help you ask better questions as you work with your tax preparer.”
22 | DECEMBER 2021 | IASOYBEANS.COM
1 // Taxation of COVID-19 relief
for farmers and ranchers. While PPP and Economic Injury Disaster Loan (EIDL) advance proceeds are not income and don’t reduce deductions, CFAP payments are different. They are fully taxable, subject to selfemployment tax and should be reported as farm income, Tidgren says.
2 // Child Tax Credit
Expansion. This is part of the $1.9 trillion American Rescue Plan Act (ARPA) of 2021. For 2021 only, “qualifying child” includes children under 18. “The child tax credit is expanded from $2,000 to up to $3,000
per children between the ages of six and 17, and up to $3,600 for children under six,” Tidgren says. If child tax credits impact you, ask your tax preparer about the child tax credit phaseout, the advance child tax credit and child tax credit reconciliation.
3 // Employee Retention
Credit. This is a fully refundable payroll tax credit. “This tax credit can be very valuable if you file tax Form 943,” Tidgren says. This credit is in place for 2020 and 2021 (with different rules for each year). “It’s worth asking your tax advisor about the employee retention credit if you have non-relative employees,” Tidgren says.
