The Best Time to File Your Taxes
There is no one best day to file, but there is a best way to plan: keep records all year, know your deadlines from official sources and talk with a tax professional early.
When is the best time to file?
Filing dates, extensions and special rules for farmers come from the IRS and can change, so confirm the current ones at the IRS website and with a tax professional. Do not rely on a date from an article.
What this site can say is that most farms do better by treating tax prep as a year-round habit than by pulling together records in a few weeks of scramble. Filing earlier can make sense when you have your records complete and want a refund or a clear picture for your lender. Filing later with an extension can make sense when records are still coming in, but taxes owed are generally still due on time.
If you are unsure whether you should file now or wait, ask your preparer which choice fits your records and your cash. Both choices can be right depending on the year.
What records should you keep?
Keep income records such as milk checks, sales receipts, program payments and any insurance proceeds. Keep expense records such as feed, fuel, repairs, interest, labor and supplies. Keep asset records for equipment, livestock and buildings.
A simple system beats a perfect one. Choose a folder, a spreadsheet or software that you will actually use and update it monthly.
Keep paper and digital copies in different places, and keep them as long as your tax professional advises.
- Milk checks, sales and program payments
- Feed, fuel, repairs, interest and labor
- Equipment and asset purchase records
- Loan statements and year-end balances
- Mileage, insurance and home-office notes where relevant
How do estimated payments and cash flow fit?
Farmers often have uneven income, and some qualify for different estimated payment rules. The rules are technical, so ask a tax professional how they apply to you.
Cash flow planning matters too. Setting money aside during good months makes the tax bill less of a shock. The farm money guide covers budgeting basics in general terms.
Remember that tax payments and loan payments often fall in similar months. Put both on the same calendar so you do not spend one set of funds twice.
What can your tax professional help with?
Ask about depreciation and equipment purchases, how to treat program payments and insurance proceeds, accounting methods, entity choices and what documentation you need. A professional who works with farms will know the special rules.
The IRS publishes farm tax guidance, and Texas A&M AgriLife Extension often offers tax education in Texas. State tax questions can be directed to the Texas Comptroller. Always check what is current.
For small operations, the SBA also offers free educational material on business basics that can make tax conversations easier.
How do loans and lenders look at your taxes?
Lenders usually ask for tax returns, financial statements and a cash flow plan. Clean, consistent records make that conversation easier. If you plan to apply for credit, see how the timeline works in small farm business guides and check lender requirements.
Programs from USDA Farm Service Agency also ask for documentation, so organized records pay off in more than one place.
If you are changing how you keep books, ask your preparer to review the new setup once during the year and not only at filing time.
What mistakes are most common?
Mixing personal and farm spending, missing receipts, forgetting to track program payments and waiting until the last minute are common problems. Another is making major purchases without asking how they affect taxes first.
A short meeting with your preparer in the fall, well before year-end, can catch problems while you can still act on them.
Review last year's return before you start this year's records. It reveals which items you tracked well and which were guesses.
Where does the humor come in?
Nothing makes a farm shop go quiet like the words shoebox of receipts. Over at farm.FM agribusiness and farm.FM satire they poke fun at paperwork, and a farm.FM story about tax time is a decent way to take the edge off.
Then get the shoebox to your preparer. Then block an hour on the calendar to start.
Sources and further reading
- IRS: federal tax guidance
- Texas Comptroller: state tax and economic data
- Texas A&M AgriLife Extension: Texas extension service
- USDA Farm Service Agency: FSA farm programs and loans
- Federal Reserve: U.S. central bank
- SBA: small business loans and counseling
Ask locally: Ask a tax professional who works with farms, and your AgriLife Extension office, what applies to your operation this year.