Farmers look for rebates, tax credits

After disastrous year for agriculture in 2007, local tax accountants say Cullman-area farmers could use every tax break they can get, and there are several open to them that aren't generally being taken advantage of.

Gaylon Drake, a local CPA, said there is a special provision for farmers to delay paying their 2007 tax until March of 2008. Drake said he has 200 to 300 clients who are full-time farmers or have hobby farms.

Farmers are able to avoid making estimated tax payments by filing a return and paying the entire tax due on or before March 1 of the year the return is due. March 1 falls on a Saturday this year so farmers have until the following Monday, March 3, to file and pay. This estimated tax rule applies if at least two thirds of a person's total gross income is from farming during the tax year or previous tax year.

"Most farmers don't pay in quarterly," said Drake. "They prefer to write a check once a year. That is mainly because they have seasonal and unpredictable incomes. Row croppers don't make their money until fall and this year a lot of them had no crop at all. The special provision for farmers allows them to hold on to their tax money until March of the following year. It allows them to draw interest on that money or invest it in the farm during a tight time of year. It can save them quite a bit of money. This is a good break for farmers and they need a break this year"

However if farmers don't meet the March 3 deadline this year, they will have to pay a penalty of an extra nine percent of their income.

"It is a good idea for Farmers to analyze each quarter what they should be paying in so they don't have any surprises in March and find they can't pay the taxes due before the deadline," said Drake. "Nine percent is a stiff penalty."