March 2018
The Business of Farming

Tax Time Tips

A little extra time and effort now preserving tax return documentation could save you a lot of time and money in the future.

Before you file away this year’s tax return, you might want to take one more look through the tax documents and financial records. After all, your return might be selected for a tax audit within the next three years. Alternatively, you might want to amend the 2017 return sometime in the next couple of years. These are just two reasons why taking one last look through your files before putting them away might be a good idea. Here are a couple of questions to ask yourself.

Are your documents really complete or do you need to make more copies and maybe some notes to yourself?

People’s memories can fade over time. Take a few minutes to write down your answers to any questions your tax preparer asked in completing your return.

Look over all receipts and make sure you have clearly written which items on the receipt were used for farm operations. Similarly, look over credit card statements and label which items were for the farm. Whenever possible, staple your original credit card receipt to the credit card statement to clearly document farm purchases. Remember, a tax auditor looking at your return will be asking for proof for each item on the return and taking a few extra minutes may save you time and money down the road.

Did you buy any farm equipment or build any new fencing, bins or buildings in 2017 that were depreciated on your tax return? Take a few minutes and put a copy of the purchase invoices in the 2017 tax file. You may thank yourself for this in a couple of years.

Did you buy any breeding livestock in 2017 and add them to the depreciation report? Take a few minutes and add a copy of those purchase invoices to the tax file. Also, did you put an identifying ear tag or tattoo on these animals? If so, add this information, too.

If you have 2017 accounting reports such as balance sheets or income statements prepared by your accountant or from your own accounting software, make sure you have a printed copy included in the tax records matching the tax return information. You don’t want to be looking for a printed report two years from now and not be able to find it.


Will all your tax documents still be readable in three years?

Thermal paper receipts fade over time. If you have any doubt about document fade, take a few minutes and make a copy of the original tax document and staple them together. Three years from now, you may be very happy you did.

Farm & Agribusiness Management Regional Extension Agents are members of the Alabama Cooperative Extension System. Our objective is to develop farm operational and financial educational programming for Alabama producers of all types. These programs are offered through print, online and in-person classes, seminars and presentations. If your organization is interested in having one of our REAs speak to your group, please contact your local Extension office.



Robert Page, CPA, REA II, is a regional Extension agent with Farm & Agribusiness Management.