Corn with two hundred dollar bills on topDo you realize in 34 days we’ll be celebrating Thanksgiving?! Are you thinking of next year’s taxes already? If not, you should be according to Paul Neiffer, farm CPA at CLA Connect.

Here are some items to complete in 2022 to help with your 2023 taxes.

  1. Be specific when writing prepaid expenses.
    For this to pass IRS audits, a certain quantity of product must be requested. With supply chain issues, the supplier must be able to provide that quantity, or it isn’t a valid prepaid. Just putting down a deposit at the coop does not work.
  2. Stay off the tax treadmill.
    With a variety of payments issued in the past few years, many deferments are being made. For example, ERP payments can only be defered to the year after damage was incurred.
  3. Draft a plan for unwanted revenue.
    With current drought situations in the West, some operations have had to sell off stock and assets. Work with your CPA on a plan for deferment until the drought is over, and a reinvestment in the herd can be made.
  4. Consider how recent inflation announcements can work in your favor.
    “Because each tax bracket is going up by 7%, everybody is going to be able to participate in the benefit of that 7% increase,” Neiffer says. “That increase is actually greater than the exemption was until about 20 years ago, so that’s really good news for most farmers.”

Read more on 2023 tax actions that can be taken in 2022 here.