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previous page Previous Page: Publication 225 - Farmer's Tax Guide - Including the Credit or Refund in Income
next page Next Page: Publication 225 - Farmer's Tax Guide - Estimated Tax Penalty for 2008
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taxmap/pubs/p225-069.htm#en_us_publink100076267

Chapter 15
Estimated Tax(p84)

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taxmap/pubs/p225-069.htm#TXMP0cea38d4Introduction

You are not required to pay estimated tax if you expect to owe less than $1,000 (after subtracting your credits and income tax withholding). If you are a qualified farmer, defined below, you are subject to the special rules covered in this chapter for paying estimated tax.

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Useful items

You may want to see:


Publication
 505 Tax Withholding and Estimated Tax
Form (and Instructions)
 1040-ES: Estimated Tax for Individuals
 2210-F: Underpayment of Estimated Tax by Farmers and Fishermen
See chapter 16 for information about getting publications and forms.
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Special Estimated Tax Rules for Qualified Farmers(p84)


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Special rules apply to the payment of estimated tax by individuals who are qualified farmers. If you are not a qualified farmer as defined next, see Publication 505 for the estimated tax rules that apply.
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Qualified Farmer(p84)


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Qualified Farmer

An individual is a qualified farmer for 2008 if at least two-thirds of his or her gross income from all sources for 2007 or 2008 was from farming. See Gross Income, next, for information on how to figure your gross income from all sources and see Gross Income From Farming, later, for information on how to figure your gross income from farming. See also Percentage From Farming, later, for information on how to determine the percentage of your gross income from farming.
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Gross Income(p84)


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Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from income tax. On a joint return, you must add your spouse's gross income to your gross income. To decide whether two-thirds of your gross income for 2008 was from farming, use as your gross income the total of the following income (not loss) amounts from your tax return.
EIC
Gross income is not the same as total income shown on line 22 of Form 1040.
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Gross Income From Farming(p85)


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Gross Income From Farming

Gross income from farming is income from cultivating the soil or raising agricultural commodities. It includes the following amounts.
For 2008, gross income from farming is the total of the following amounts from your tax return.
For more information about income from farming, see chapter 3.
EIC
Farm income does not include any of the following:
  • Wages you receive as a farm employee.
  • Income you receive from contract grain harvesting and hauling with workers and machines you furnish.
  • Gains you receive from the sale of farm land and depreciable farm equipment.
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Percentage From Farming(p85)


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Percentage From Farming

Figure your gross income from all sources, discussed earlier. Then figure your gross income from farming, discussed earlier. Divide your farm gross income by your total gross income to determine the percentage of gross income from farming.
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Example 1.(p85)

Jane Smith had the following total gross income and farm gross income amounts in 2008.
Gross Income
 TotalFarm
Taxable interest$3,000 
Dividends500 
Rental income (Sch E)41,500 
Farm income (Sch F)75,000$75,000
Gain (Form 4797)5,0005,000
Total$125,000$80,000
Schedule D showed gain from the sale of dairy cows carried over from Form 4797 ($5,000) in addition to a loss from the sale of corporate stock ($2,000). However, that loss is not netted against the gain to figure Ms. Smith's total gross income or her gross farm income. Her gross farm income is 64% of her total gross income ($80,000 ÷ $125,000 = 0.64). Therefore, based on her 2008 income, she does not qualify to use the special estimated tax rules for qualified farmers, discussed next. However, she does qualify if at least two-thirds of her 2007 gross income was from farming.
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Example 2.(p85)

Assume the same facts as in Example 1 except that Ms. Smith's farm income from Schedule F was $90,000 instead of $75,000. This made her total gross income $140,000 ($3,000 + $500 + $41,500 + $90,000 + $5,000) and her farm gross income $95,000 ($90,000 + $5,000). She qualifies to use the special estimated tax rules for qualified farmers, discussed next, since 67.9% (at least two-thirds) of her gross income is from farming ($95,000 ÷ $140,000 = .679).
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Special Rules for Qualified Farmers(p85)


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Special Rules for Qualified Farmers

The following special estimated tax rules apply if you are a qualified farmer for 2008.
Figure 15-1 presents an overview of the special estimated tax rules that apply to qualified farmers.
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Required Annual Payment(p85)


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Required Annual Payment

If you are a qualified farmer and must pay estimated tax for 2008, use the worksheet on Form 1040-ES to figure the amount of your required annual payment. Apply the following special rules for qualified farmers to the worksheet.
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Figure 2–A Text DescriptionFigure 2–A  
previous pagePrevious Page: Publication 225 - Farmer's Tax Guide - Including the Credit or Refund in Income
next pageNext Page: Publication 225 - Farmer's Tax Guide - Estimated Tax Penalty for 2008
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication