The Internal Revenue Code provides a special provision for farmers and fisherman who have income that varies greatly from year to year called "income averaging." In addition to fluctuating income, if there is a major tax rate change as is the case for 2013, income averaging may be especially beneficial for you if you are a farmer or fisherman and are lucky enough to be subject to the top tax rate of 39.6% in 2013, 2014 and 2015.
If your taxable income includes any taxable income from farming or fishing, it probably varies greatly from year to year like the taxable income of most farmers and fishermen. As a result of this income variation, your applicable tax rate may vary from 0% to 39.6%. Farm income averaging allows you to average your income and "throw" some income into lower tax rate years to reduce your tax liability.
The farm income averaging rules are complicated and complex. If you have questions regarding this or regarding any of the other special rules for farmers, please feel free to give us a call or an email.
Please note that every individual tax situation is unique. Before you embark on any specific tax position, it is important to consult your tax adviser. The above isn't and shouldn't be construed as tax or professional advice.
The farm income averaging rules are complicated and complex. If you have questions regarding this or regarding any of the other special rules for farmers, please feel free to give us a call or an email.
Please note that every individual tax situation is unique. Before you embark on any specific tax position, it is important to consult your tax adviser. The above isn't and shouldn't be construed as tax or professional advice.
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