2013 LOGAN COUNTY FARM OUTLOOK MAGAZINE LINCOLN DAILY NEWS.com October 25, 2013 Page 47
basically means that every
employee could be a part-timer,
but if there are enough of them
that the hours they work equal
50 full-time employees, then that
farm will have to comply with
health care mandates.
What may change, though, is the
ability of the producer to afford
health insurance for himself
and his family. While Klemm
said he has yet to see anything
concrete on what the insurance
rates are through the Illinois
Health Insurance Marketplace,
the idea behind the health care
law is to make private ownership
of health policies affordable for
everyone.
On the family farm, up until
now, many times a spouse
will go to work for a firm
or company that can offer
affordable insurance through a
payroll deduction group plan.
These changes could mean that
the spouse could have the option
of staying on the farm and
becoming a more integral part of
the operation.
Klemm said producers in the
higher income brackets will
have some new taxes to deal
with effective Jan. 1, 2014. One
will be a 0.9 percent additional
Medicare tax, and another is
an increase in the tax on net
investment income.
Klemm said the tax on net
investment income is for the
very high-income brackets. It
won’t affect a large number of
farmers, but the real concern
might be for those who are
entering retirement and see
lower input costs in the last year
or two, greater income due to
the sale of equipment no longer
needed, and even land sales.
Klemm said those who are
looking at retirement down the
road in a few years should be
looking at this now, evaluating
what they have and how they
will manage their exit from
farming.
How the farmer addresses
this, Klemm said, is going to
be a personal decision. There
are options to begin prior to
retirement to spread out the
income. He said that in the
later years of life, one thing
that changes could be that the
on-the-farm debt falls, leaving
more cash on hand. Instead of
pocketing that profit and paying
the taxes on all of it, an option
could be to invest a portion of
the profit in a retirement plan
for future use and future tax
obligations.
So, in the end, does Klemm
have a crystal ball? Can he tell
you what to do to be profitable?
Can he tell you how to prepare
for every contingency that may
come along?
No, he doesn’t have a one-size-
fits-all system to help make a
farmer profitable, but he does
know this:
“Things are going to change. I
don’t know what the changes
will be, but I know they will
come. You have to be willing to
look at the options and evaluate
how they could fit into your
operation,” he said.
“Does that mean you have to
change? Not necessarily, but
you have to be able to maintain
the competitive edge. And that
is where it goes back to the
necessity of evaluating those
records, looking at your true net
positions and what your true net
income is.”
