Continuing Conversation of Tax Law Changes

Continuing Conversation of Tax Law Changes

In continuing our Friday conversation about changes to the tax law that will affect some farmers and ranchers — CliftonLarsonAllen Partner and Farm CPA Today Blogger Paul Neiffer shares

Neiffer: “Another change that has taken place for 2014 is we now have the imposition of the high income Medicare tax — so if your earned income from being a farmer is more than $200,000 for single and $250,000 for married filing joint there is an extra .9 percent Medicare tax you will have to pay. And in addition if farmers are above those same dollar amount — so $200,000 to $250,000 — and they have investment income such as interest dividends, certain types of rents, annuities there is an extra 3.8 percent net investment income tax that will apply.”

Neiffer explains that IRS had issued some temporary regulations that was concerning that may have deemed any type of cash rent income that a farmer was renting to a corporation that the farmer does the farming with would be subject to this tax. Good news, however, Neiffer says

Neiffer: “The final regulations that came out about a month and half ago have eliminated that concern. Any self rental type income where the farmer is using — say the farmer is using a Schedule F and he’s got a partnership that he rents the land from that income will not be subject to the net investment tax so they no longer have to worry about it.”

His blog, FarmCPAToday.com has plenty of good information.

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