There are many tax advantages and special deductions available to qualifying farmers. Examples in New York State alone include the Farm Workforce Retention Credit and the Farmer's School Property Tax Credit. There are many advantages on both the state and federal levels. In order to qualify for these credits, one must be considered an eligible farmer. This article will explain exactly what it means to be considered an eligible farmer.
For purposes of these credits, a farm employer is a taxpayer subject to tax under Article 9-A or Article 22 that:
- is a corporation (including a New York S corporation), a sole proprietorship, a limited liability partnership (LLC), or a partnership
- is also an eligible farmer.
What is an eligible farmer?
According to the New York State Department of Tax and Finance...
An eligible farmer is a taxpayer whose federal gross income from farming for the tax year is at least two-thirds of excess federal gross income.
Excess federal gross income is the amount of federal gross income from all sources for the tax year in excess of $30,000. For purposes of the Farm Workforce Retention Credit, farmers must include payments from the state's Agricultural and Farmland Protection Program adminstered by the New York State Department of Agriculture and Markets in federal gross income from farming.
Farming includes the operation or management of livestock, dairy, poultry, fish, fruit, fur-bearing animal, and vegetable (often referred to as truck) farms. Farming also includes the operation or management of plantations, ranches, ranges and orchards.
For example, farming includes (but isn't necessarily limited to) the raising or production of the following commodities:
- field crops, including corn, wheat, oats, rye, barley, hay, potatoes and dry beans;
- fruits, including apples, peaches, grapes, cherries and berries;
- vegetables, whether raised conventionally or hydroponically, including tomatoes, snap beans, cabbage, carrots, beets and onions;
- horicultural specialties, including nursery stock, ornamental shrubs and ornamental trees and flowers;
- livestock and livestock products, including cattle, sheep, hogs, goats, horses, poultry, farmed deer, farmed buffalo, ostrich, emus, fur-bearing animals, milk and eggs;
- aquaculture products, including fish, fish products, water plants and shellfish (provided the aquaculture products are grown and raised as opposed to merely being harvested or caught); and
- honey and beeswax produced from the farmer's own bees.
The Farm Workforce Retention Credit is a New York State program enacted in 2016 that provides refundable tax credits for farm employers and owners of farm employers. Currently it's effective for any tax years beginning after January 1, 2017 and before January 1, 2022.