When Are Farm Taxes Due? Deadlines for Farmers

Farmers often encounter unique considerations due to the nature of their income and operations. The Internal Revenue Service (IRS) provides specific rules and deadlines for individuals and entities engaged in the business of farming. This article clarifies key aspects of federal farm tax obligations for the 2023 tax year, which are typically filed in 2024.

Determining Farmer Status for Tax Purposes

Special tax rules and deadlines apply only if an individual or entity meets the IRS’s definition of a “farmer.” A taxpayer is considered to be in the business of farming if they cultivate, operate, or manage a farm for profit, as an owner or tenant. This includes a broad range of agricultural activities. A farm includes operations such as livestock, dairy, poultry, fish, fruit, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses, or other similar structures used primarily for raising agricultural or horticultural commodities, and orchards and woodlands.

The primary criterion for qualifying as a farmer for estimated tax purposes is the “two-thirds rule.” This rule states that at least two-thirds (66 ⅔%) of an individual’s total gross income for the current or preceding tax year must come from farming. Gross income from farming includes income reported on Schedule F (Form 1040), Profit or Loss From Farming, which covers sales of crops, livestock, and other farm products. It also includes farm rental income reported on Form 4835, Farm Rental Income and Expenses, and gains from the sale of livestock held for draft, breeding, sport, or dairy purposes reported on Form 4797.

Income from activities like processing farm products into new items, such as making wine from grapes or apple bread from apples, is not considered gross income from farming and is instead reported on Schedule C, Profit or Loss From Business. However, income from honey production is an exception and is reported on Schedule F. Owning farmland without active involvement in its operation does not qualify an individual as a farmer for tax purposes.

Farm Tax Filing Deadlines

Qualifying farmers have specific tax filing deadlines that differ from most other taxpayers. For the 2023 tax year, if at least two-thirds of an individual’s gross income came from farming in either 2022 or 2023, they can avoid estimated tax penalties by filing their federal income tax return and paying all taxes due by March 1, 2024. If March 1 falls on a weekend or holiday, the deadline shifts to the next business day. Calendar year corporations and partnerships meeting the two-thirds rule have a March 15 deadline.

Farmers who do not meet the March 1 or March 15 deadline, or who prefer to pay estimated taxes throughout the year, must make estimated tax payments. These payments are due in four installments: April 15, June 15, September 15, and January 15 of the following year. For farmers who make a qualifying estimated tax payment by January 15, 2024, they can file their tax return by the regular April 15, 2024, deadline without incurring estimated tax penalties.

Paying sufficient estimated tax or meeting the special March 1 deadline helps farmers avoid underpayment penalties. Taxpayers can also file for an extension of time to file their return using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. This form provides an automatic six-month extension, pushing the filing deadline to October 15. An extension to file is not an extension to pay; any taxes owed are still due by the original deadline to avoid penalties and interest.

Submitting Your Farm Tax Return and Payments

After preparing their federal farm tax return, taxpayers have several options for submission. Electronic filing (e-file) allows taxpayers to submit their returns through tax software or with a tax professional. E-filing is the fastest and most secure way to submit a tax return. Alternatively, taxpayers can file their return by mail, sending forms to the appropriate IRS address, which varies by return type and location.

The IRS offers several methods for paying federal farm taxes. IRS Direct Pay is a free online service that allows payments directly from a checking or savings account. Payments can also be made using the Electronic Federal Tax Payment System (EFTPS), a free service from the U.S. Department of the Treasury. EFTPS allows users to schedule payments up to 365 days in advance and is suitable for individuals and businesses.

Taxpayers can also pay with a credit or debit card through a third-party payment processor, though these services involve a processing fee. Payments can also be made by check or money order, payable to the “United States Treasury,” and mailed with the tax return or payment voucher. Maintaining accurate records of all farm income and expenses is important for efficient tax preparation.