Income Tax Changes for 2019

Charles Brown headshot

Contributed by Charles Brown, Extension Farm Management Field Specialist, crbrown@iastate.edu

The Tax Cuts and Jobs Act (TCJA) was signed into law December 22, 2017. Among many changes, it created new tax brackets for 2018 thru 2025. It also eliminated the deduction for personal exemptions and raised the standard deduction in 2019 to $12,200 for single fliers, $24,400 for married filing jointly and $18,350 for head of households. Keep in mind that most of the changes in TCJA end in 2025 and move back to pre-2018 tax law.

Table 1. Tax Brackets and Rates, 2019

Section 179 Expense election was one of the changes that was made permanent. In 2019, this is now $1,020,000 and the phase-out starts at $2,550,000. On Iowa returns, the maximum amount is $100,000 and the phase-out starts at $400,000. In 2020, Iowa couples with the Federal amounts.

One of the other major changes in the TCJA was the repeal of like-kind exchange treatment for traded personal property. Under old law when a farmer traded machinery, the farmer depreciated the difference paid plus any remaining basis on the item traded in and no taxes were due. Under TCJA when a farmer trades machinery, the trade is considered a sale in the amount the dealer allowed for the trade-in, triggering ordinary taxable gain, and the farmer gets to depreciate the full purchase price of the machinery received. If the farmer does not want to pay tax on the gain of the trade-in, they are forced to use Section 179 or bonus depreciation to offset the taxable gain. Iowa did not couple with the Federal change in 2018, but maintained the old like-kind exchange rules. In 2019, for Iowa returns, farmers may use the old rule for like-kind exchanges or use the new Federal rule. In 2020, Iowa will couple with the Federal rule.

If farmers are forced to use Section 179 or bonus depreciation to offset gains from trading machinery, there can be other consequences. Excessive accelerated methods of depreciation reduce net Schedule F income, possibly taking it down to $0 or maybe even a negative situation. IRA and other retirement plan contributions are based on earned income (Schedule F). The deduction for self-employed health insurance is based on Schedule F net income. Contributions for self-employment tax are based on Schedule F net income. Reducing Schedule F income affects money available for retirement planning and other “above the line” deductions taken on the 1040. Also new in 2018 was the new “post card” 1040 Form that also had multiple schedules attached to it. After numerous complaints, there is another new 1040 Form for 2019. This one is a combination of the old 1040 and the 1040 from 2018. Maybe eventually they will get it right. I am not sure I can stand more simplification in our tax code.

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Farm Employee Management: Farm Safety and Hiring Youth on the Farm

Contributed by Melissa O’Rourke, B.S., M.A., J.D. Farm & Agribusiness Management Specialist, Iowa State University Extension & Outreach, morourke@iastate.edu

MelissaORourke2-Nov2011At this writing (May 2014) summer is approaching and many farm and other agribusiness operations will consider hiring youth for summer employment.  This makes it a particularly good time to review some guidelines related to hiring young people on the farm.  This article will outline a few guidelines, and also provide some web-based resources with answers to other questions.

We sometimes see tragic accidents—deaths and serious injuries— involving young farm workers.  These kinds of deaths and injuries to young people served as the impetus for regulators to propose strengthening child labor rules related to farm employment in 2011.  However, the US Department of Labor (“DOL”) abandoned proposed regulations in favor of increased farm safety programs.

The proposed regulations would not have applied to children working on farms owned by their parents under what is known as the “parental exemption” which allows children of any age who are employed by their parent, or a person standing in the place of a parent, to perform any job on a farm owned or operated by their parent or such person standing in the place of a parent. However, the proposals would have had other impacts in non-family farm employment situations, such as prohibiting youth (in all employment) from using cellphones or other electronic devices while operating power-driven equipment. Children under the age of 16 would have been prohibited from operating almost all power-driven equipment with limited exemptions for student learners.  After taking input, the DOL issued a statement regarding withdrawal of the proposals noting that the “administration is firmly committed to promoting family farmers and respecting the rural way of life, especially the role that parents and other family members play in passing those traditions down through the generations.”  Rather than adopting the proposed regulations, the DOL sought to work with rural stakeholders to develop educational programs to reduce accidents to young workers and promote safer agricultural working practices.

The need for continued vigilance and enhanced farm safety programs is undisputed. In the meantime – and particularly because of significant media attention given to this issue – farm producers have questions regarding the current rules for youth employment in farm and other ag-related occupations.

The basic guidelines include the following:

  • Youths of any age may work at any time in any job on a farm owned or operated by their parents.
  • Youths ages 16 and above may work in any farm job at any time.
  • Youths aged 14 and 15 may work outside school hours in jobs not declared hazardous by the DOL.
  • Youths 12 and 13 years of age may work outside of school hours in non-hazardous jobs on farms that also employ their parent(s) or with written parental consent.
  • Youths under 12 years of age may work outside of school hours in non-hazardous jobs with parental consent, but only on farms where none of the employees are subject to the minimum wage requirements of the FLSA – meaning small farms.
  • Local youths aged 10 and 11 may hand harvest short-season crops outside school hours for no more than 8 weeks between June 1 and October 15 if the employer has obtained special waivers from the DOL.

Again, minors under the age of 16 may not work in hazardous occupations in agriculture unless the youth is employed on a farm owned or operated by the parents. Also, 14- and 15-year old student learners enrolled in vocational agricultural programs are exempt from certain hazardous occupation prohibitions when certain requirements are met; and minors aged 14 and 15 who hold certificates of completion of training under a 4-H or vocational agriculture training program may work outside school hours on certain equipment for which they have been trained.

Hazardous occupations in agriculture would include the following particular examples:

  • Operating a tractor of over 20 PTO horsepower, or connecting or disconnecting an implement or any of its parts to or from such a tractor;
  • Operating or working with a corn picker, grain combine, hay mower, forage harvester, hay baler, potato digger, feed grinder, crop dryer, forage blower, auger conveyor, unloading mechanism of a nongravity-type self-unloading wagon or trailer, power post-hole digger, power post driver, or nonwalking-type rotary tiller;
  • Operating or working with a trencher or earthmoving equipment, fork lift, potato combine, or power-driven circular, band or chain saw;
  • Working in a yard, pen, or stall occupied by a bull, boar, or stud horse maintained for breeding purposes; a sow with suckling pigs; or a cow with a newborn calf (with umbilical cord present);
  • Felling, buckling, skidding, loading, or unloading timber with a butt diameter or more than 6 inches;
  • Working from a ladder or scaffold at a height of over 20 feet;
  • Driving a bus, truck or automobile to transport passengers, or riding on a tractor as a passenger or helper;
  • Working inside: a fruit, forage, or grain storage designed to retain an oxygen-deficient or toxic atmosphere; an upright silo within 2 weeks after silage has been added or when a top unloading device is in operating position; a manure pit; or a horizontal silo while operating a tractor for packing purposes;
  • Handling or applying toxic agricultural chemical identified by the words “danger,” “poison,” or “warning” or a skull and crossbones on the label;
  • Handling or using explosives; and
  • Transporting, transferring, or applying anhydrous ammonia.

The examples summarized above are based on federal regulations, but there may also be applicable state rules. Depending on the state where the youth employment takes place, those state rules should be consulted, and the law setting the most stringent standard (either state or federal) must be observed.

It is impossible to over-emphasize farm safety for all workers, both youth and adults. Producers should conduct farm safety audits and institute an on-going farm safety education program. Additionally, producers should consult with their own legal counsel for specific advice on any employment or liability questions that may arise, and consult with their insurance professionals to assure that adequate liability coverage is maintained for the operation.

Finally, here are some web-based resources with more information about hiring youth on the farm:

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Farmers encouraged to contact insurance provider about haying or grazing a cover crop this spring

News release from USDA Risk Management Agency, contact Dustin Vande Hoef, 515/281-3375.

Iowa Secretary of Agriculture Bill Northey today encouraged farmers with cover crops to contact their insurance provider if they are interested in haying or grazing after May 10, 2013.  The USDA Risk Management Agency (RMA) has provided new guidance that insurance providers may allow farmers to continue to hay or gaze the cover crop until May 22, 2013.

“It is critically important for farmers to work with their insurance provider and receive approval if they are interested in haying or grazing a cover crop past May 10,” Northey said.  “It has been a very challenging spring for farmers and hopefully this announcement will provide farmers with some additional flexibility.”

USDA had previously provided guidance to farmers interested in insuring a spring crop following a cover crop that they must not hay, graze or otherwise harvest the cover crop after May 10, and terminate the cover crop prior to planting the spring crop.  The cover crop must be terminated with tillage or herbicide, grazing is not considered terminating the crop.

“This new guidance from RMA only affects farmers interested in haying or grazing a cover crop past May 10,” Northey added.  “Otherwise, a farmer only has to terminate the cover crop prior to planting.  So, if they aren’t able to get into a field due to wet weather they still have time to kill the cover crop prior planting and not have it impact their crop insurance.”

In addition to contacting their insurance provider, farmers can also contact the USDA Risk Management Agency’s Saint Paul Regional Office for more information via phone at 651-290-3304, email at rsomn@rma.usda.gov, or online at http://www.rma.usda.gov/aboutrma/fields/mn_rso/.

Bulletin – Haying and Grazing of a Cover Crop for the 2013 Crop Year

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Hiring Youth on the Farm: Child Labor Regulations in Agriculture

Contributed by Melissa O’Rourke, B.S., M.A., J.D. Farm & Agribusiness Management Specialist, Iowa State University Extension & Outreach, morourke@iastate.edu

The need for continued vigilance and enhanced farm safety programs is undisputed. The basic guidelines regarding the current rules for youth employment in farm and other ag-related occupations include the following:

  • Youths of any age may work at any time in any job on a farm owned or operated by their parents.
  • ŸYouths ages 16 and above may work in any farm job at any time.
  • ŸYouths aged 14 and 15 may work outside school hours in jobs not declared hazardous by the DOL.
  • ŸYouths 12 and 13 years of age may work outside of school hours in non-hazardous jobs on farms that also employ their parent(s) or with written parental consent.
  • ŸYouths under 12 years of age may work outside of school hours in non-hazardous jobs with parental consent, but only on farms where none of the employees are subject to the minimum wage requirements of the FLSA – meaning small farms.
  • ŸLocal youths aged 10 and 11 may hand harvest short-season crops outside school hours for no more than 8 weeks between June 1 and October 15 if the employer has obtained special waivers from the DOL.

Again, minors under the age of 16 may not work in hazardous occupations in agriculture unless the youth is employed on a farm owned or operated by the parents. Also, 14- and 15-year old student learners enrolled in vocational agricultural programs are exempt from certain hazardous occupation prohibitions when certain requirements are met; and minors aged 14 and 15 who hold certificates of completion of training under a 4-H or vocational agriculture training program may work outside school hours on certain equipment for which they have been trained.

Hazardous occupations in agriculture would generally be described as the following:

  • Operating a tractor of over 20 PTO horsepower, or connecting or disconnecting an implement or any of its parts to or from such a tractor;
  • Operating or working with a corn picker, grain combine, hay mower, forage harvester, hay baler, potato digger, mobile pea viner, feed grinder, crop dryer, forage blower, auger conveyor, unloading mechanism of a non-gravity-type self-unloading wagon or trailer, power post-hole digger, power post driver, or non-walking-type rotary tiller;
  • Operating or working with a trencher or earthmoving equipment, fork lift, potato combine, or power-driven circular, band or chain saw;
  • Working in a yard, pen, or stall occupied by a bull, boar, or stud horse maintained for breeding purposes; a sow with suckling pigs; or a cow with a newborn calf (with umbilical cord present);
  • Felling, buckling, skidding, loading, or unloading timber with a butt diameter or more than 6 inches;
  • Working from a ladder or scaffold at a height of over 20 feet;
  • Driving a bus, truck or automobile to transport passengers, or riding on a tractor as a passenger or helper;
  • Working inside: a fruit, forage, or grain storage designed to retain an oxygen-deficient or toxic atmosphere; an upright silo within 2 weeks after silage has been added or when a top unloading device is in operating position; a manure pit; or a horizontal silo while operating a tractor for packing purposes;
  • Handling or applying toxic agricultural chemical identified by the words “danger,” “poison,” or “warning” or a skull and crossbones on the label;
  • Handling or using explosives; and
  • Transporting, transferring, or applying anhydrous ammonia.

The rules summarized above are based on federal regulations, but there may also be applicable state rules. Depending on the state where the youth employment takes place, those state rules should be consulted, and the law setting the most stringent standard (either state or federal) must be observed.

It is impossible to over-emphasize farm safety for all workers, both youth and adults. Producers should conduct farm safety audits and institute an on-going farm safety education program. Additionally, producers should consult with their own legal counsel for specific advice on any employment or liability questions that may arise, and consult with their insurance professionals to assure that adequate liability coverage is maintained for the operation.

For more information see:

  • Child Labor Requirements In Agricultural Occupations Under the Fair Labor Standards Act (Child Labor Bulletin 102) (revised June 2007) http://www.dol.gov/whd/regs/compliance/childlabor102.pdf
  • Federal Youth Employment Laws in Farm Jobs (Fact Sheet #40, US Department of Labor, Wage and Hour Division) http://www.dol.gov/whd/regs/compliance/whdfs40.pdf
  • For information on Iowa child labor laws, see the Iowa Workforce Development website: http://www.youthforiowa.org/laborlaws.html

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DOT regulations: lighting and towing

Kristen Schulte, ISU Extension and Outreach Farm & Agribusiness Management Specialist

It is important to occasionally review Iowa Department of Transportation guidelines when hauling and moving agriculture implements and commodities. The following guidelines are taken from the Iowa Department of Transportation Truck Information Guide; this publication can be accessed from www.iowadot.gov/mvd/omve. Additional questions should be directed to the Office of Motor Vehicle Enforcement, 800-925-6469.

Lighting and Reflectors

Motor trucks, truck-tractors, semi-trailers, and any other commercial motor vehicle must meet light and reflector requirements as outlined by federal regulations (FMCSR Part 393.11).  Additionally, farm trailers are subject to the same lighting and safety regulations as registered trailers. Non-commercial vehicles, farm trailers, and implements must meet requirements below and maintain the lighting and reflectors which they were equipped with when manufactured.

At all times between sunset and sunrise when operated on a public highway, self-propelled implements shall be equipped with at minimum the following lighting:

  • One lighted white headlamp visible to the front;
  • One lighted red tail lamp visible to the rear; and
  • One lighted amber flashing light visible to the rear.

At all times between sunset and sunrise when operated on a public highway, towed implements shall be equipped with at minimum the following lighting:

  • One lighted red tail lamp visible to the rear, located at the rear of the rearmost towed implement; and
  • If the visibility of the lighted amber flashing light on the towing implement is obstructed to the rear by the towed implement or cargo, an additional lighted amber flashing light located at the rear of the rearmost towed implement.

The required light devises must be visible from a distance of 500 feet. These lighting requirements are in addition to the slow moving vehicle sign requirement of farm tractors or equipment operating at speeds less than 35 miles per hour.

Towing Implements of Husbandry

Any vehicle requiring registration when towing any other vehicle or implement on the highway is required to be equipped with and use a drawbar and safety chain. When two implements are in tow, a drawbar must be used and a safety chain is not required but recommended.

Raw agriculture products include commodities such as, but not limited to, ag lime, grain, hay, livestock, raw milk, straw, and fruit. Implements of husbandry include vehicles or equipment designed for reconstructed for agricultural purpose and used exclusively in an agricultural operation. It includes farm tractors, combines, grain carts, wagons, or fenceline feeders (referred to as implements).

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