How to stay organized and avoid headaches during tax season

Key Takeaways:
  • Farmers can simplify 1099 reporting by collecting W-9 forms from vendors throughout the year, avoiding a last-minute scramble.
  • It’s important to know which payments require 1099s, such as contract labor, rents and professional fees, while understanding exemptions like payments to corporations or made via third-party vendors.
  • Using Adams Brown’s Agribuilder platform can automate the 1099 process, helping farmers stay compliant and avoid penalties.

 

It’s no secret farmers wear many hats—grower, manager, mechanic, accountant and more. When tax season rolls around, one of the biggest headaches farmers face is handling 1099 forms. It can feel like an overwhelming process, but it doesn’t have to be. With a little planning and organization, you can take the guesswork out of 1099s and make your January a whole lot smoother. 

Here are a few practical tips to help you manage your 1099s with less stress. 

1. Don’t Wait Until December – Gather Vendor Information Throughout the Year 

One of the biggest mistakes we see farmers make is waiting until the end of the year to gather vendor information. By that time, you’re likely trying to finish up your harvest, make holiday plans and get your books in order for tax season—it’s a lot. Instead, make it a habit to collect a W-9 from any new vendors, contractors, or service providers before they perform any work. 

For example, if you hire someone to help with repairs or contract labor, have them fill out a W-9 form before they start. That way, when January rolls around, you aren’t scrambling to track down information or worrying about meeting deadlines. 

2. Know When you’re Required to Send a 1099 

The IRS has a specific set of rules for when you’re required to issue 1099 forms. For farmers, the most common situations involve payments over $600 for things like: 

  • Contract labor – This includes any hired help that’s not on your regular payroll, such as repair work or seasonal labor. 
  • Rents – Whether you’re renting equipment, land or even stalks, these payments are often reportable on a 1099. 
  • Veterinarian services – While the medicine and supplies your vet provides aren’t included, the services they perform are. 
  • Professional fees – This could include payments to your accountant, attorney or other professionals helping with your farm’s operations. 

It’s important to keep track of these expenses as you go through the year so there are no surprises when the time comes to issue your 1099s. 

3. Know When you’re Exempt from 1099 Reporting 

While many payments need to be reported, there are also several exemptions that farmers often don’t realize. For example, you typically do not need to file a 1099 for: 

  • Payments to corporations (unless it’s a veterinarian or attorney) 
  • Payments for freight or hauling services 
  • Personal payments not related to your farming business 
  • Payments made through third-party vendors, such as credit cards 

Understanding these exemptions can save you a lot of unnecessary paperwork and confusion. 

4. E-Filing Requirements & Deadlines 

If you have to file more than 10, you are required to e-file them with the IRS. Paper filings won’t cut it anymore. Luckily, the IRS provides a free e-filing service called IRIS (Information Returns Intake System). You can learn more about how to e-file here: https://www.irs.gov/filing/e-file-information-returns-with-iris. 

Here are the key deadlines to keep in mind: 

  • 1099-NEC (for non-employee compensation): Must be filed by Jan. 31, 2025 
  • 1099-MISC, 1099-INT, and 1099-DIV: Must be filed by Feb. 28, 2025 

Missing these deadlines can lead to penalties, so be sure to mark your calendar. 

5. We Make 1099 Season Easy with Agribuilder 

Dealing with 1099s doesn’t have to be a solo job. If you’re on Adams Brown’s Agribuilder platform, you’re already ahead of the game. Agribuilder takes care of all the compliance work for you—timelines, forms and everything in between. It manages your 1099s so you can focus on what you do best—running your farm. 

Get rid of gut feeling in farm financial management…

Questions? 

Every farm is different and 1099 rules can get tricky. If you’re unsure about your obligations or want to learn more about how Agribuilder can simplify your 1099 reporting, reach out to an Adams Brown farm accountant. We’re here to help you navigate the process and save you time and stress. 

Note: This article covers the most common 1099 requirements and exemptions for farmers. It’s not a complete list, so consult your advisor for your specific situation.