Specialist Reviews Income Tax Changes for Agricultural Producers

As tax preparation gets under way, agricultural producers need to be aware of a number of changes in tax regulations.

"Staying up-to-date on these changes will help producers prepare their returns accurately," says North Dakota State University Extension Service farm economist Ron Haugen. Farmers have until March 1 to file their returns without penalty. If they made an estimated tax payment by January 15 they have until April 15 to file.

Items to note for 2003 income tax preparation:

Additional reminders:

Income averaging rules for farmers are in effect. Income averaging allows farmers to level out higher income years with lower income years. Farmers who elect to use income averaging for federal purposes can also use income averaging for North Dakota state income tax purposes.

Crop insurance proceeds for 2003 received in 2003 may be deferred to 2004 if you qualify. You must use cash accounting and show that under normal business practices you would include the sale from damaged crops in any future tax year.

Producers who have forced livestock sales because of drought (or other weather related conditions) may postpone gain on the portion of sales that are above normal sales. An attachment to the tax return is required.

Any questions should be addressed to your tax professional, the Internal Revenue Service at (800) 829-1040 or the North Dakota State Tax Department at (800) 638-2901. Also you may order Publication 553, Highlights of 2003 Tax Changes, by calling (800) 829-3676.