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Covers using income averaging to reduce tax, outlines key IRS forms for individual returns and Kansas-specific K-40 changes for 2024, and summarizes partnership reporting concepts such as Form 1065 and related schedules.",{"@graph":63,"@context":119},[64,80,102],{"@type":65,"itemListElement":66},"BreadcrumbList",[67,71,74,77],{"item":68,"name":69,"@type":70,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":72,"name":10,"@type":70,"position":73},"https://docshare.wps.com/template/",2,{"item":75,"name":11,"@type":70,"position":76},"https://docshare.wps.com/template/presentations/",3,{"item":78,"name":59,"@type":70,"position":79},"https://docshare.wps.com/template/understanding-a-farm-income-tax-return-tax-education-overview/304432/",4,{"url":78,"name":59,"@type":81,"image":82,"author":87,"headline":59,"publisher":90,"fileFormat":93,"inLanguage":57,"description":61,"dateModified":94,"datePublished":95,"encodingFormat":93,"isAccessibleForFree":96,"interactionStatistic":97},"DigitalDocument",{"url":83,"@type":84,"width":85,"height":86},"https://docshare.wps.com/thumbnails/understanding-a-farm-income-tax-return-tax-education-overview/304432.png","ImageObject",442,249,{"name":88,"@type":89},"Gloria","Person",{"url":68,"name":91,"@type":92},"DocShare","Organization","application/pdf","2026-09-29","2026-09-19",true,{"@type":98,"interactionType":99,"userInteractionCount":101},"InteractionCounter",{"@type":100},"ViewAction",8,{"@type":103,"mainEntity":104},"FAQPage",[105,111,115],{"name":106,"@type":107,"acceptedAnswer":108},"What should be considered when farm income tax returns are part of a lending decision?","Question",{"text":109,"@type":110},"Focus on the accuracy of accounting records, whether computerized records reconcile to source information, and how thoroughly the preparer reviews and verifies data versus data entry. 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ASSOCIATION\u003Cbr>\u003Cbr>\u003Cbr>Agricultural Economics\u003Cbr>|\n| --- |\n| Disclaimer\u003Cbr>• This presentation is for educational purposes and none of what is presented should be considered formal legal or tax advice\u003Cbr>• Always consult with a trusted professional in a specific individual situation |\n| \u003Cbr>\u003Cbr>Agricultural Economics |\n|  |\n\n\n| Kansas Farm Management Association \u003Cbr>• KSU Ag Economics employes 24 Extension Ag Economists in 11 offices throughout the state\u003Cbr>• Assist producers with: |\n| --- |\n| \u003Cbr>\u003Cbr>Agricultural Economics\u003Cbr>◦ Accounting\u003Cbr>◦ Accrual financial analysis\u003Cbr>◦ Enterprise analysis\u003Cbr>◦ Income tax planning\u003Cbr>◦ Transition planning\u003Cbr>◦ Estate planning agm[anager.info/kfm](anager.info/kfm)a\u003Cbr>|\n|  |\n| Some Initial Thoughts….\u003Cbr>• Ifa tax return is partofa lending decision, consider:\u003Cbr>◦ Accuracy of accounting records – reconciled computerized accounting vs shoebox\u003Cbr>◦ Preparer effort– reviewing and verifying vs data entry\u003Cbr>◦ Preparer knowledge – some significant nuances to agricultural income tax prep\u003Cbr>• Garbage-In-Garbage-Out |\n| \u003Cbr>\u003Cbr>Agricultural Economics |\n|  |\n\n\n| Some Initial Thoughts…. |  |\n| --- | --- |\n| • To build wealth, in the long-run: |  |\n| Net farm income + non-farm income | family living expense> + income tax liability\u003Cbr>+ land principal payments |\n| • Maximize after-tax dollars rather than minimize income tax liability |  |\n| \u003Cbr>\u003Cbr>Agricultural Economics |  |\n|  |  |\n| Individuals – Form 1040 & K-40 |  |\n| \u003Cbr>\u003Cbr>Agricultural Economics |  |\n|  |  |\n\n\n| Individual-1040\u003Cbr>• Two primary forms to report farm income\u003Cbr>◦ Schedule F – Farm income\u003Cbr>◦ Form 4797 – Sales of business property\u003Cbr>• Additional/supporting forms\u003Cbr>◦ Form 4562 – Depreciation (included in expenses on Schedule F)\u003Cbr>◦ Schedule SE – Self-employment tax\u003Cbr>◦ Form 7206 – Self-employed health insurance deduction\u003Cbr>◦ Schedule J – Income averaging\u003Cbr>◦ Form 8995/8995-A – Qualified business income deduction\u003Cbr>◦ Result reported on Form 1040, line 13 |\n| --- |\n| \u003Cbr>\u003Cbr>Agricultural Economics |\n|  |\n| Individual-1040\u003Cbr>• Schedule J-Income Averaging\u003Cbr>◦ Equally add elected amount to three prior years andrecalculate tax impact in all years to determine savings\u003Cbr>\u003Cbr>\u003Cbr>\u003Cbr>Agricultural Economics |\n\n\n| Individual-1040 |  |\n| --- | --- |\n| • Income averaging\u003Cbr>◦ In our example return, averaging saved $1,432 ($4,336 – 2,904)\u003Cbr>◦ With rates scheduled to increase in 2027, potential planning opportunity by optimizing income averaging now even if thereis no savings | |\n| \u003Cbr>\u003Cbr>Agricultural Economics |  |\n|  |  |\n| Individual –Kansas K-40\u003Cbr>• Changes to Kansas tax brackets, personal exemptions, and standard deduction in 2024\u003Cbr>• For MFJ old brackets were:\u003Cbr>◦ 3.10% $0 to $30,000\u003Cbr>◦ 5.25% $30,001 to $60,000\u003Cbr>◦ 5.70% >$60,000\u003Cbr>• New MFJ brackets\u003Cbr>◦ 5.20% $0 to $46,000\u003Cbr>◦ 5.58% >$46,000 |  |\n| \u003Cbr>\u003Cbr>Agricultural Economics |  |\n|  |  |\n\n\n| Individual –Kansas K-40\u003Cbr>• Standard deduction (MFJ) increased $240 to $8,240\u003Cbr>• Personal exemption was $2,250 per person, now $18,320 for married couple plus $2,320 per dependent\u003Cbr>• All Social Security is nontaxable to Kansas beginning in 2024\u003Cbr>• In nearly all cases, income tax liability will be lower with the 2024 changes (compared to prior years) |  |\n| --- | --- |\n| \u003Cbr>\u003Cbr>Agricultural Economics |  |\n|  |  |\n| Individual –Kansas K-40 |  |\n| • Kansas Expensing Deduction (election) allows additional deduction for depreciation amounts not accelerated (§179 or bonus depreciation) via K-120EX | |\n| \u003Cbr>\u003Cbr>Agricultural Economics |  |\n|  |  |\n\n\n| Partnerships & LLCs (taxed as partnerships)– Form 1065 & K-120S |\n| --- |\n| \u003Cbr>\u003Cbr>Agricultural Economics |\n|  |\n| Partnership –Federal 1065\u003Cbr>• Line 23 (page 1) Ordinary business income is NOT net income\u003Cbr>◦ Excludes capital gain (raised cows) and §179 deduction among other items\u003Cbr>\u003Cbr>\u003Cbr>|\n\n\n| Partnership –Federal 1065","cbCaisj4LeE3k4Ly","https://ap.wps.com/l/cbCaisj4LeE3k4Ly","pdf",519879,"English","# Disclaimer\n# Initial Thoughts\n## Accuracy and Preparer Factors\n## Garbage-In-Garbage-Out\n# Wealth Building and After-Tax Dollars\n# Individuals – Form 1040 & K-40\n## Primary Forms for Farm Income\n## Income Averaging (Schedule J)\n## Kansas K-40 2024 Changes\n# Partnerships & LLCs – Form 1065 & K-120S\n## Federal Form 1065 Income Character\n## Schedule K-1 Grouping and Segregation","[{\"question\":\"What should be considered when farm income tax returns are part of a lending decision?\",\"answer\":\"Focus on the accuracy of accounting records, whether computerized records reconcile to source information, and how thoroughly the preparer reviews and verifies data versus data entry. Also consider preparer knowledge of agricultural income tax nuances.\"},{\"question\":\"How does income averaging work and what impact can it have?\",\"answer\":\"Income averaging adds an elected amount equally to three prior years and recalculates the tax impact in all years to determine savings. In the example shown, averaging saved $1,432, and planning may still help even if no immediate savings are expected due to projected rate changes.\"},{\"question\":\"What are key Kansas K-40 changes discussed for 2024?\",\"answer\":\"The presentation lists changes to tax brackets, personal exemptions, and the standard deduction, including an increased standard deduction, revised exemption amounts for married couples and dependents, and treatment of Social Security as nontaxable to Kansas beginning in 2024.\"}]","Understanding a Farm Income Tax Return - Tax education overview | PDF"]