Goal Understand for a practical perspective how major types of taxes work for farmers
Taxes paid by Farmers Property (real estate) taxes Sales taxes Employment taxes Income taxes Self-employment taxes Gift taxes Death (estate) taxes Our focus in AAE 320
Income Taxes IRS form 1040: Income taxes (see handout) Page 1: List income sources – Wages/salaries – Interest/dividends (Schedule B) – Business income (Schedule C or C-EZ) – Capital Gain/Loss (Schedule D) – Farm Income/Loss (Schedule F) Adjustments – Deductible part of SE Tax (Schedule SE) Adjusted Gross Income (AGI): Bottom Page 1
Income Taxes Page 2 Form 1040: Taxes and Credits Itemized Deductions (Schedule A) – If choose to itemize, deduct property taxes paid and mortgage interest on home here – Calculate Taxable Income Brackets in 2011 BracketSingleMarried Filing Joint 10%< $8,500< $17,000 15%$8,500-$34,500$17,000-$69,000 25%$34,500-$83,600$69,000-$139,350 28%$83,600-$174,400$139,350-$212,300 33%$174,400-$379,150$212,300-$379,150 35%>$379,150 Progressive Tax: pay 10% on the first $8,500 earn, then 15% on the next $26,000 earn, etc.
Other Taxes Self-Employment Tax: Form 1040 line 56 (Schedule SE) Not on Form 1040 Property taxes, Sales taxes, Employment taxes Gift Taxes: of you give something to someone, you may owe gift tax (Gift tax return form 709) Estate tax: when you die, your estate may owe taxes (Estate tax return form 706)
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