As tax time approaches, many farmers might want to pre pare their taxes with computer software in order to avoid costly accounting fees or to save time. While it seems like many software programs would work for farm taxes, it still might be worth the accountants' fees to avoid the complicated filing process.
Brad Augustin, Farm Business Management instructor at South Central College in Mankato, MN, says there isn't good software for farmers to use because there's little real demand for it. “Very few farmers do their own tax returns,” he says. “There used to be a lot more many years ago, but things have gotten much larger and more complicated with IRS laws, rules and regulations.”
While many farmers may use programs like Quickbooks to keep financial records, Augustin doesn't recommend using these programs to file. They can, however, save time and money because the files created by the program can be e-mailed directly to accountants when it's time to prepare the tax returns.
In addition, Augustin says if you have several 1099 forms to fill out, you can save some money by completing those forms yourself on inexpensive software programs. “Most accountants will charge about $25-30 to do one 1099, and that's about the cost of the software,” he says. “In some cases, farmers might have as many as 25 1099s to send out in a year.”
Growers on smaller, individual farm entities might be able to use software programs like H&R Block's Tax Cut or Quicken's TurboTax to file. If they want to prepare their own taxes, though, Augustin says Web-based systems often are better because they offer more help references and don't require annual updates like purchased software.
Another option for farmers is to look into the Farm Business Management program at colleges and universities near them. Augustin says the educators in the program at South Central help farmers keep accurate records, match tax form receipts with computer records, make sure they get all the allowable deductions and keep track of more complicated transactions like asset trades and basis values. These records can then be sent directly to a farmer's accountant, saving time and money.
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