Keep Taxes in Mind this Summer: Essential Tips for Farmers and Ranchers

Jun 6

The official first day of summer — June 20, 2024 — is closing in on us, and while some of us are mid-harvest others are headed off for a well-deserved vacation and some of us are soaking up the chaos that is summers with kids in activities.

Amidst the excitement, it’s easy to let important matters, like taxes, slip to the back of our minds. However, staying on top of your tax responsibilities throughout the year can save you from potential headaches down the line.

If you or any of your family members are taking on seasonal work this summer, it’s crucial to handle your taxes correctly out of the gate and we’ve rounded up a few practical tax tips to keep in mind.

Summer Employment: Seasonal Workers

Each new job requires a fresh Form W-4, which helps determine the right amount of income tax to withhold from your paycheck, which ensures you’re not caught off guard by a large tax bill or left wondering why your refund was smaller than expected. Accurate withholding keeps your finances balanced, allowing you to enjoy your summer earnings without worry.

Although, as business owners this may not apply to you, it does apply your teenager who is taking on their first off-farm position.

Identify Your Employment Status: Wage Worker vs. Self-Employed

We tackle this topic a lot with our Mastermind Group: are you classified as a wage worker or self-employed? Both can have significant tax implications. We love walking through the pros and cons of providing yourself a salary and not just owner’s draws.

When talking about summer jobs, specifically, and not just the pros or cons of being a farmer or rancher as a career, we can boil it down to: wage workers typically receive a W-2 from their employer, while self-employed individuals are issued a 1099-MISC.

If your summer income includes self-employment and you earn over $400, you’ll need to pay self-employment taxes. This is important to track, as it affects how much you set aside for taxes and your overall tax planning strategy.

Expecting a Refund? File Your Tax Return

Even if your income falls below the filing threshold, it’s wise to file a tax return if you’re expecting a refund. Employers often withhold more tax than necessary from your paychecks. By filing a return, you can claim this excess and get your money back—an unexpected boost to your summer budget!

Summer Weddings: Update Your Tax Details

Getting married is the best, and it also brings changes to your tax situation.

If you tie the knot before December 31st, you’re considered married for the entire tax year. Make sure to update your tax return filing status to either "Married Filing Jointly" or "Married Filing Separately." Additionally, both you and your spouse will need to revise your paycheck withholding using Form W-4 to reflect your new marital status. Don’t forget to notify the Social Security Administration of any name changes and the IRS if you’re moving to ensure there are no delays in processing your tax returns.

Summer Camp Expenses: Tax Breaks for Working Parents

Sending your kids to summer camp can be a fun way to keep them engaged while you work. If the camp enables you to work or actively seek employment, the expenses might qualify for the Dependent and Child Care Credit. Remember, only day camps are eligible, not overnight camps. This tax credit can be a helpful offset for those necessary childcare expenses during the busy summer months. Get a receipt!

Summer Rental Income: Make the Most of Your Vacation Property

If you’re fortunate enough to own a summer home, renting it out for up to 15 days a year can be tax-free. This can be a great way to earn some extra income without the hassle of additional taxes. Moreover, you can deduct qualified expenses for the rental on Schedule A of your tax return, including mortgage interest if you paid any on the property.

Summer is a time for relaxation and enjoying the fruits of your labor, but it’s also a crucial period for staying on top of your financial responsibilities. By keeping these tax tips in mind, you can ensure that your summer remains stress-free and that you’re well-prepared for tax season. Whether you’re navigating summer employment, planning a wedding, or managing a rental property, a little foresight can go a long way in keeping your financial house in order.

Farm Assist provides bookkeeping services tailored to support your agricultural operations. Please be aware that Farm Assist is not a Certified Public Accountant (CPA) firm, and our services do not include the provision of legal or tax advice. We do, however, work closely with a CPA and can offer referrals to ensure you receive the professional guidance you need. For personalized financial, legal, or tax advice, we strongly recommend consulting with a qualified CPA or other professional advisors to address your specific needs and circumstances.

Holly Haralson

Holly is a pharmacist with more than a decade of experience ensuring accuracy in medication review and dispensing, along with complex medication therapy management. She pairs those skills with a passion for her family’s Texas farming and ranching operation. Holly is absolutely the person you want as an extension of your team, and it’s fair to say she is one of the reasons Jonathon is able to devote his time to serving his clients. She keeps things running smoothly.

As the Grandview Farms bookkeeper, office manager, and all around entrepreneurial maven, Holly discovered her passion for solving financial puzzles and uses that skill to help bring financial best practices and sometimes a little order to the chaos in the books and offices of Empire Ag Clients.

https://youragempire.com