Things without all remedy should be without regard; what’s
done is done.

Shakespeare may not have been referring to last year’s taxes
when he wrote that as a
part of Macbeth, but the 1995 tax year is done. Only
Congress can make changes to
it now.

So, while farmers gather financial records and receipts from
1995, it’s a good time to
begin thinking about the 1996 tax year.

"Taxes aren’t pleasant for anyone, but there are some
things farmers can do to
make the blow a little softer," said Keith Kightlinger, a
farm business advisor with
the University of Georgia Extension Service.

"Tax management is a part of good business
management," he said. "It’s
something you have to pay attention to occasionally throughout
the year."

Because farmers are "cash-basis" taxpayers,
Kightlinger said, they have some
control over their tax liability. Producers can prepay expenses,
delay expenses or even
time transactions to adjust their annual farm income.

However, to exert that control, they must keep accurate and
detailed records.
"Pencil and paper or computer makes no difference," he
said, "as long as
the accuracy is there."

Computers force accuracy, and available software can make
generating reports easier.
But computers can be an expensive alternative to a notebook,
accountants’ ledgers and a
good, sharp pencil or fine-point pen.

Farmers can look at their total farm income starting around
September and begin making
management decisions to control their tax liability for the
year.

For instance, if total income will be very high, farmers can
buy specific supplies for
the next year or defer noncontract sales until the new year.

On the other side of the coin, Kightlinger gave the example
of a farmer with a loss who
is holding a number of bales of cotton. He could sell part or
all of the cotton and still
not have a high tax liability.

Like anyone, farmers should consult an income tax preparation
specialist for specific
information and advice on managing their farm tax liability.

The Farmers’ Tax Guide from the Internal Revenue
Service also provides helpful
information for farmers.

Kightlinger recommends that farmers contract with a tax-
preparation specialist to file
their farm tax returns.

Tax laws are complex and subject to change, he said. Tax
underpayment due to misreading
or misunderstanding a law can lead to substantial penalty and
interest fees, so clear
knowledge of the laws is essential.

"Farmers can’t be experts at everything," he said.
But knowing a little about
tax laws can help farmers make management decisions that will
ultimately result in tax
savings.

Kightlinger said the cost of contracting a professional,
licensed tax preparer can pay
off in tax savings.

Farmers should have these records easily available for their
tax preparer:

* Receipts or other legal documents for equipment or
supplies, sales, purchases or
trades.

* Records of livestock kept, sold, bought or lost through
death.

* Updated employee records.

* Receipts or documents from legitimate contract work done on
the farm.

* Bank statements and 1099 forms documenting interest
income.

Farmers having a hard time finding these documents need to
take the time to set up a
filing system. Establishing a definite place for papers will be
a big help for next year.

Filing systems can be as simple or complex as the farmer
wants.

Simple files work best for many people, with separate files
for sales receipts, bank
statements, purchase agreements or labor contracts and employee
records. Others choose to
cross-index or computerize files for easy retrieval.

No matter how farmers choose to set up files or prepare their
tax returns, Kightlinger
advises everyone to think about taxes before Dec. 31.

"Taxes must be paid," he said. "It’s up to the
individual to decide how
tough or easy filing a return will be and the size of their tax
liability."