With all the excitement this year it is hard to believe that fall is already here, and harvest is winding down. This year our local farmers have been blessed with good weather for harvest and most of them that I have visited with are very happy with the yields. Combine that with that prices being better than when crops were planted, most farmers are looking to have a better year than they originally thought.
Better yields, better price, better year brings up an issue that most people do not want to talk about, taxes. Taxes can be a cringe worthy thing for some, but the two things that I have said in the past about taxes are, “I don’t mind paying them, if I believe they are being put to good use” and “Paying taxes means I made a profit, so that is a good thing.”
If a person does have a good year and would like to shield some of that profit from taxes, there are quite a few options that can help lower their tax burden and allow them to put some of that money away for retirement. I have farmers or other self-employed people use a wide variety of accounts to do just that. The simplest account is a traditional IRA. Yearly contribution limit for a Traditional IRA $6,000 for those under 50 years old, and $7,000 for anyone 50 years and over. If a person has a great year and would like to put more away then that, there are other types of retirement plans that may allow the individual to put away up to $57,000 per year. If any of these plans are of interest, you should first consult your tax preparer to see what makes sense for your individual situation, then contact me to go over investment options.
As always, our office’s goal it to be the local resource of information for retirement and planning. If you have any questions on any of this, feel free to call our office at your convenience.
Tyler Williams
Financial Advisor
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
This is meant for educational purposes only. It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Waddell & Reed and its representatives do not offer tax advice. Please consult with a tax and financial advisor regarding your personal situation prior to making any financial related decisions. (10/20)