Farmers and ranchers, like many employers, want to attract and retain good employees. One way to do that is to offer employee benefits. Farmers report the expenses of employee benefit plans like accident and health plans, group-term life insurance, and dependent care assistance programs on line 15 of Schedule F. Other benefit expenses, such as employer contributions to retirement plans, are reported on line 23.
Example 1. Amal operates a mushroom farm. She provides subsidized children’s daycare to her employees who harvest, grade, and package the various types of mushrooms. The daycare operates from 6:30 am until 6:30 pm in an independent facility. Amal contributes $200 per month per employee; Amal’s employees who participate in this benefit pay an additional $400 per month. This year Amal had 5 employees who participated for an average of 10 months of the year. Thus, Amal incurred $10,000 in expenses for the daycare benefits. Amal uses Line 15, Schedule F to report and deduct this expense.
Example 2. Enrique provides group-term life insurance for his workers on his cattle ranch. He provides 5 times the employee’s salary rounded up to the nearest $10,000. Working with his insurance agent, Enrique can manage the cost and provide a worthwhile benefit to his employees. This year the entire cost was $3,500, which Enrique reports and deducts on Line 15, Schedule F.
Example 3. Suzy owns a fruit orchard with 10 full-time employees. Suzy provides a group accident and health care plan to her employees, which Suzy can acquire through her membership in a national fruit packer’s association. She pays for the employee’s insurance, and the employee pays for the spouse and any other dependents. This year, Suzy’s cost for this employee benefit is $85,000. Suzy reports and deducts the expense on Line 15, Schedule F.
The Center for Agricultural Law and Taxation is a partner of the National Agricultural Law Center (NALC) at the University of Arkansas System Division of Agriculture, which serves as the nation’s leading source of agricultural and food law research and information. This material is provided as part of that partnership and is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.