In many farm families, children help their parents with chores, caring for the animals, or tending the crops. When they’re young, they often just want to help and “do what mom and dad do.” But once they get old enough (and experienced enough) to perform more skilled or “grown-up” tasks, many farmers want to pay their children for their labor at a rate more in line with the fair market value of their labor. When farmers start paying their children for work on the family farm, one general question invariably comes to mind: “Do my kids need to file a tax return?”
Here are some frequently asked questions about when your children need to file taxes and paying them for work on the farm:
- Q: When do my children need to start filing taxes?
- A: Generally, you can assume that your child needs to earn the “standard deduction amount” before you must file taxes. The standard deduction amount is $12,400 for a single person in 2020. However, if your children have W2 income they might want to run the numbers to see if they qualify for a refund of the withheld taxes from that W2 income, in which case filing a tax return would be a good idea.
- Q: What if my child is an owner in the family farm and receives income through the family farm operation, or has income from dividends or interest on investments?
- A: If a minor has “unearned income” in excess of $1,100, then they will need to file a tax return, regardless of earned income. A minor is taxed at their parents’ rate on any taxable unearned income. For farm kids, this becomes an issue if they have an ownership interest in a pass-through farm entity and receive a K1. If a child’s unearned income is only on bank account income, then filing a tax return is usually not necessary unless they approach the standard deduction amount in earned income.
- Q: How should I report my children’s’ farm income that I pay to them for their work on the family farm?
- A: It depends, based on how much that farm income is.
- If your children’s total earned income for the year is under $600, then you don’t need to do anything.
- If your children will likely be well within the $12,400 mark for their 2020 income but over $600, a 1099 is a good idea. If their income is within the standard deduction amount then they won’t owe any income tax on earned income, and with a 1099 they won’t have to go through the process of filing a return to get a refund of withheld income. On the other hand, YOU will be able to deduct the amount that you pay them as a legitimate farm expense.
- If your children will be earning close to $12,400 mark and you are already issuing W2’s to other employees, then consider adding your children to the payroll system and issuing them a W2 as well. [NOTE – if you put your children on your payroll, remember that they are also subject to consideration in worker’s comp and unemployment reporting].
- BONUS: If you pay your child through normal payroll, your child has the opportunity to start funding an IRA. While retirement years seem far, far, away for a minor, a small investment in a tax-deferred account can grow significantly over your child’s working life.
Farmers lead the way in reduction of environmental impact while – at the same time – increasing productivity.
Yes, this is a promotional message from the American Farm Bureau – but it has good and relevant facts and is a quick, 2-minute lesson on how ag really works.
reMarkable Tablet started off leaning more toward artists and creative designers, but they quickly upgraded the system, and are marketing their new reMarkable 2 product toward business.
[Please take a moment to visit the link and watch the video for an overview of the technology]
This is truly a paperless note-taking device. It is a combination of a specifically designed writing surface with a tablet format.
This is my primary note-taking device, particularly out of the office. I take this to meetings where I need to take notes, but a laptop computer would be a distraction. I use it for client meetings, phone calls, and just about any time when I need to be able to take quick or detailed notes.
This is – by far – the best notetaking experience of any digital platform. The pen is extremely easy to use and the interface with the tablet “feels” like writing on paper – no slipping, streaking, skipping, or dragging.
It uses its own pen with tiny replaceable nibs (and I go through about a nib per month). The pen does not use a battery – only the actual device needs charging. The pen has storage for a replacement nib for remote replacement (which I’ve needed occasionally)
There is good handwriting recognition, but it doesn’t work well with a lot of diagrams on the page, and you can only “convert and send” – you can’t keep the converted text locally on the device for reference.
You can upload PDF documents to the tablet and write directly on the text – this started out very clunky, but they have upgraded the software and the interface is fairly smooth.
- Truly paperless. No reusable paper to clean, no traditional paper to store.
- True “paper” feel when writing
- Very paper-like feel. No stray marks, no smearing. Infinite number of pages (I typically get about 50 pages per notebook before I upload and process the notes to various files)
- Wirelessly transfers to your computer
- Seems to have unlimited storage (I just haven’t reached the limit)
- Very portable – I take this everywhere
- Firm tablet format – I can take notes on any surface (including balance on my knees in meetings)
- Monochrome (no color)
- File size tends to be large (but they are continuously improving this)
- Requires charging – but has two-week battery life (I get about a week on my reMarkable 1 device)
- Smaller than standard page-size (which means less text per page, unless you write small – which I’m learning)
- Costly – Of the three platforms reviewed, this is the most expensive “out of the box” at $399 for the “launch-offer” of the reMarkable 2 device (going on now).
- Clunky typewriting text interface. You can create Notebook or file names on the tablet, but the keyboard is slow to touch-response. Fortunately, I create a few notebooks based on topic (meeting notes, client notes, etc.) and run a lot of pages before I sync to the computer and dispurse to various files.
Rating: 9 out of 10 – This is my current “go-to” device, and I’m willing to live with the limitations since 99% of my use is not affected by the limitations.
Overall rating of the three devices reviewed (please go back to read the other posts, if you have not seen them):
I suspect that I will eventually discard the LiveScribe Aegir. Compared to the other two platforms, it is more difficult to use, requires actual paper, and has a much lower confidence rating. It was the first on the market, and has improved on its own design, but falls short overall and does not meet my needs like the other two platforms.
My primary device is the reMarkable 1 – I’m tempted to get the reMarkable 2 to take advantage of the improvements. I like the Rocketbook for a number of more creative applications, but it doesn’t go to meetings as well and requires a bit more work to keep up. I look forward to using the Orbit for my day-to-day lists and quick notes, but I won’t know until my order ships in August.
Rocketbook has a high degree of fun associated with the product – that, alone, merits mention, but it’s also a genuinely great product.
Rocketbook – Started as a KickStarter, and just wrapped up another KickStarter Campaign for their new Orbit product (and yes, I jumped on that one, too). This platform has several physical options (including single-use paper, decals, and whiteboard configurations), but I’m going to focus on the Core (known as Everlast when I purchased the system), which is a reusable notebook.
Rocketbook uses digital technology via an app on your smart device. When you take a picture, the software transcribes (certain features) and sends the image to a designation of your choice (including Google Drive, Evernote, and other popular platforms). Because the “important part” is the app, not necessarily what you write on, the developers have used their extensive imagination to create a huge variety of uses that directly relate to the business (and student) world.
The notebook interface I use (Core) is an erasable platform and can be used over and over (I still have and use the original notebooks I purchased, and I also use a decal affixed to a clipboard for specific projects that need to be portable or “notes on the go” or notes posted for general view).
The pen is any Pilot Frixion writing instrument (widely available at any office supply store)
- The notebook is easy to write on
- Minimal smearing (dries very quickly)
- Can use colored pens for emphasis
- Almost paperless – reusable paper-like interface, but nearly endless reuse
- Can specify file names on page (uploads to the specified filename)
- Secure physical device – once you erase the pages, the information is gone
- Does not require a battery or separate equipment to capture and transfer the data
- Cost – Fairly inexpensive. Letter-sized notebook bundles start at around $32.00, plus the cost of the Frixion pen system of your choice. Products go on sale from time to time, and I have taken advantage of sales to purchase the decal system.
- Minimal handwriting-to-text conversion
- Pages must be erased to reuse (requires some time – and sometimes I forget to erase the pages before I’m out of room in a notebook)
- Pages uploaded as individual files – it would be nice to be able to specify collections of pages in one file
- Pages can be damaged (creased) – need to take a little care when cleaning
- Sometimes the ink does not lay well on the paper (a little like writing on plastic – sometimes requires a little patience), especially for notebooks pages that have been used many times
Rating: 9 out of 10. Overall, this is a great system. There are a LOT of uses of the software beyond just the notebook, and the team is continuously developing new uses of the software. My expectation is that the team will eventually develop more robust handwriting recognition and improve file management and handling.
If you are interested in this technology, you should check out the website for great videos and suggestions for using the product.
While I don’t anticipate 100% adoption anytime soon, I try to keep my office as paper-free as possible. However, as an attorney, I take copious notes about everything – from telephone calls to conversations, to work in progress. Unfortunately, there is a large part of my note-taking that is not easily (or at all) done on the computer due to location, manners, and convenience, so I need to be sure I have the ability to take hand-written notes anytime, anyplace.
I’ve tried using my tablet, and while I like EverNote for organizing personal projects (mostly because my tablet is nearly always handy outside of my office), I don’t like it for note-taking because the tablet surface is too slick and overly-responsive to accidental touch. I’ve used my tablet at conferences (particularly before I started using the technologies that are the focus of this series of posts), but it was a struggle and distracting to my listening.
I’ve tried several technologies, and all have their pros and cons. Mostly (and I can’t stress this enough FutureLawyer), it comes down to personal preference – what works for YOU (or, in this case, what works best for me).
My analysis is based upon what I need in a note-taking device:
- Convenient and reliable note-taking
- Digital capture and transfer to my computer (or some other storage location that I regularly use)
- Migration toward the complete elimination of physical paper
- Added features – Transcription of handwriting to text
The top technologies that I am going to review are LiveScribe, Rocketbook, and Remarkable, and they are “top” because of almost completely different reasons.
LiveScribe Aegir Smart Pen is the current name of the technology that started out as Echo. I had an Echo when it was first released, and liked it well enough, but it was large, clunky, and hard to hold. LiveScribe pen is much smaller pen profile, and much easier to use (and they FINALLY made a version that is black (Black Dolphin, pictured) and not pastel green or pink (really? for professional applications?)
- Good digital transcription and formats to PDF
- Extremely portable
- Records audio (the only format that does this) and can link audio with the relevant section of notes
- Easily syncs to any smart device for live transcription or uploading via Bluetooth or direct connection
- Affordable – $120 via Amazon, plus the cost of notebooks (comes with one)
- Requires paper (see above for “paperless goals”). Also, requires specially-printed paper in the form of a wide-assortment of notebooks and tablets, or you can print your own from a downloadable template.
- Monochrome – no color – the Aegir might be different – I’ve only used it with one color
- Requires ink refills – small ink cartridges that are sometimes hard to get. Watch out for cheap knock-offs of questionable quality. You can get ink colors, but they don’t upload as color (that I can tell – the Aegir might be different)
- Lack of confidence that the device is capturing text when you are writing. With the Echo, especially, and with the LiveScribe, rarely, I have written along, decided to download, and then realized the pen wasn’t working (battery low). I do not want to have to go to the trouble of launching the “receiving device” when I reach for a pen to write, just to be sure the silly thing is capturing text.
- Requires paper (this is a big problem for digital-only-wannabes)
- Demographic is more for students and others who have a need to capture audio recording along with notes. More bells (audio recording) than I need.
My favorite tech-attorney, FutureLawyer highly recommends this device and has used it since Echo. (While I follow his recommendations on a lot of tech, my husband actually purchased my first Echo for me as a gift). I agree with him that the Aegir is a vast improvement over the Echo, and once the desktop application was available, I was on board. I use this primarily for specific projects that require extensive and on-going notetaking, so I have a single, bound volume to store with the rest of the paper file (while “paperless ” is a goal in my office, I recognize that it is not entirely achievable, and still have a fair amount of paper files – though vastly less paper than 10 years ago).
Unfortunately, this is only one of my digital tools, and will likely never be my “go-to” for digital note-taking. I never use it outside the office because of that “lack of confidence” thing.
Rating – 7 out of 10: Excellent for what it is made to do – take notes which can be automatically uploaded to the cloud or computer, and record audio. However, it lacks a lot of the features I’m looking for.
I miss Mythbusters! They are definitely the go-to source for all of your pseudo-science assumptions. Check out these two videos that show – almost TOO graphically – how germs can spread!
Indiana ranks 4th in the Nation in the production of peppermint and 5th in spearmint. Here’s how it is done:
It’s not news that technology is both a blessing and a burden. Every new iteration of today’s farm equipment is more efficient and allows the farmer to manage acres despite an ever-dwindling labor pool.
Today’s technologically advanced farm equipment is computer-controlled from the steering wheel to the tractor tires. Unfortunately, John Deere uses proprietary software to control all the equipment operations, and even simple malfunctions require special software to diagnose and repair. Of course, only your authorized John Deere dealer has access to that software, and if it is late or your farm is too far away from a dealership (or the dealership doesn’t have enough technicians to serve all the customers), a farmer could be stopped indefinitely. Every hour of downtime costs money.
In protest, some farmers are turning to computer hacks or black market copies of diagnostic software so they can make their own repairs. Technically, this violates the intellectual property of John Deere. Practically, farmers believe they have no choice since John Deere is unable to provide any reasonable alternative.
Iowa is considering legislation that would allow farmers to use diagnostic software without penalty. This is causing quite a stir in other technology markets. While I disagree that AT&T and Microsoft would suddenly decline to sell their products in a state that allowed device hacking, I certainly can see cause for concern.
There should be a “happy medium” where both sides can prosper. The manufacturers should provide licensed diagnostic software that allows the farmers to make their own repairs. Those that are geographically remote or mechanically capable will take advantage of the opportunity, but my expectation is that there will still be a substantial market for dealerships to provide technical and mechanical service.
Farm labor is becoming too scarce – and this includes qualified technicians. John Deere should embrace this change, and not only provide diagnostic software but teach classes (and provide certification). A smart corporation can figure out how to profit from a model that make the customer happy.
For more information, check out this video:
You should add Millienial Farmer to your social media feed. Zach Johnson is a Minnesota Farmer that brings the world with him to work. He talks plainly about the challenges and realities of farming.
This episode finds him traveling to Florida where crops are very different from Minnesota (or Indiana). See the harvest of sugarcane and head lettuce in this video.
NOTE – this is a 20+ minute video. For more information, be sure to read the show notes.