Fisherman Hooked On March 1st 2018 Estimated Tax Deadline

WASHINGTON ― The Internal Revenue Service is reminding fisherman about the March 1 deadline to take advantage of special rules that can allow them to forgo making quarterly estimated tax payments.

Anyone with income from their fishing business may be able to avoid making any estimated tax payments by filing their 2017 return and paying the entire tax due on or before March 1, 2018. This rule generally applies if farming or fishing income was at least two-thirds of the total gross income in either 2017 or the preceding tax year.

Taxpayers (Fisherman) can use IRS Direct Pay to quickly pay an individual tax bill or make an estimated tax payment directly from a checking or savings account at no cost. Payments can be scheduled 24 hours a day, seven days a week, up to 30 days in advance without any fees or pre-registration.

When a taxpayer uses IRS Direct Pay, they receive instant confirmation after they submit their payment. Direct Pay cannot be used to pay the federal highway use tax, payroll taxes or other business taxes.

Taxpayers who wish to pay their federal business taxes electronically should enroll in the Electronic Federal Tax Payment System (EFTPS), or visit IRS.gov/payments to check out other payment options.


Income from Fishing

There are certain tax laws that may apply to fishing income. This section explains some sources of a fisherman’s income and how both the buyer and seller of fish should report and track their income.

Fishing Deductions

This section gives information about some of the deductions available to businesses in the fishing industry.

Fishing Permit/Licenses Sales, Exchanges and Transfers
Certain tax rules apply when selling, exchanging, and transferring permits or licenses. This section provides information about selling, exchanging, and transferring permits and the value these permits maintain after transfer, sale or exchange.

Capital Construction Fund (CCF)
In order to help fishermen save for the purchase of a fishing vessels or improve a current vessel. The CCF program allows taxpayers to defer taxable income by making contributions to a NOAA approved depository and eventually use the accumulated funds for purchasing or improving fishing vessels.

Depreciation and Amortization for the Fishing Industry
This page will guide you through how different fishing assets should be depreciated or amortized.

Estimated Taxes for Fishermen
There are special rules for estimated taxes in the fishing industry. This page helps to explain some of these requirements for both self-employed and S corporations.

Self-Employed Fishermen
Some crewmembers may be considered self-employed. However, the boat owner still has tax responsibilities to the crew. You can also find information about foreign crewmembers here.

Fishing Penalties and Notices
Because of the way some taxes are reported in the fishing industry, avoiding penalties takes special care. You can find information about penalties and notices here.

Recordkeeping Guidelines for Fishermen
Buying or selling fish can make recordkeeping difficult. This page may be able to help guide you toward effective recordkeeping.

 

List Of Common Deductions For The Fishing Industry

 

Fishermen’s Meals Deductions
When meal expense is allowable, the calculation of the deductible meal expense can be made either using the actual cost method or the standard meal allowance method.

Fishermen’s Health Insurance Deduction
In some cases you may be eligible to deduct the amount paid for medical insurance and qualified long-term care insurance for yourself, your spouse, and your dependents.

Bad Debt from Bankrupt Fish Buyer
Occasionally, a fish buyer will go bankrupt without paying for the fish. There are different ways to incorporate the loss in your taxes, depending on your accounting method.

Fishing Fuel Tax Credit
A credit or refund may be allowed for the excise tax on fuel used in a boat engaged in commercial fishing.

Fishing – Report income and expenses from fishing on Form 1040, Schedule C.pdfProfit or Loss From Business (Sole Proprietorship), or Form 1040, Schedule C-EZ.pdfNet Profit From Business (Sole Proprietorship). Use Form 1040, Schedule SE.pdfto figure self-employment tax if your net earnings from fishing are $400 or more. For general information about the rules applying to individuals, including commercial fishermen who file Schedule C or C-EZ, refer to Publication 334Tax Guide for Small Business. Also, see Fishing Tax Center for more information on fishing income, deductions, and other tax issues for commercial fishing. If your trade or business is a partnership or corporation, see Publication 541Partnerships, or Publication 542Corporations.

A fisherman may be eligible to claim a credit or refund of excise tax paid on fuel used in certain boats.

Commercial Fishing Boats

Boats used in commercial fishing include only watercraft used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. They include boats used in both fresh and salt-water fishing.

Boats used for both sport fishing and commercial fishing on the same trip are not included. Fuel used in aircraft to locate fish is not fuel used in commercial fishing.

Fuel

Gasoline – A credit or refund may be allowed for gasoline used for supplies for vessels/boats used in commercial fishing.

Special Motor Fuels – A credit or refund may be allowed for special motor fuels used for supplies for vessels and boats used in commercial fishing. Special motor fuels generally include any liquid other than gasoline, diesel fuel, kerosene, gas oil, or fuel oil.

Compressed Natural Gas (CNG) – A credit or refund may be allowed for CNG used for supplies for vessels and boats used in commercial fishing.

Diesel Fuel – A credit or refund may be allowed, depending on the type of diesel fuel used:

  • Undyed – A credit or refund is allowed for tax paid on undyed diesel fuel that is used for a nontaxable purpose.
  • Dyed – No credit or refund is allowable for the use of dyed diesel fuel since this fuel is purchased tax-free.

Reminder: If you use the cash method of accounting, the amount of the fuel tax credit reported on your last year’s tax return must be reported as income on your current return.

TaxConnections Tax Ambassador In Washington D.C. , Tom Kerester Reports On IRS Releases And Publications

Need Further Research On This Topic? Contact Tom Kerester

Thomas Kerester

Tom Kerester knows how to connect the dots! Tom is working with TaxConnections to make a difference by getting people involved behind the scenes of the Ways and Means. We will take you on an educational journey through a series of blogs and show you how to get involved in making a difference in the new tax legislative policy under the President Trump Administration.

Subscribe to TaxConnections Blog

Enter your email address to subscribe to this blog and receive notifications of new posts by email.