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NY Farm Employer Overtime Credit Advance

December 12, 2023

Written by Complete Payroll

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Is your farm eligible for the NY Farm Employer Overtime Credit? This credit allows farmers to recoup some of the overtime wages that they’ve paid their employees. Let’s take a look at who’s eligible and how you can claim the advanced payment for the farm credit.

New York State Farm Credit Eligibility

The New York State Farm Credit is available to eligible farmers who are engaged in the business of farming. You are considered engaged in the business of farming if you operate, manage, or cultivate a farm for profit, even if that farm is not profitable every year.

This also applies to farmers who rent their property to another farmer, assuming that it’s a shared rental agreement. For that agreement to make you eligible for the NY State Farm Credit, you must participate in at least three of the below items.

  • Pay for at least half of the direct operational costs of the farming business.
  • Provide at least half of the tools or equipment needed to farm or operate the land.
  • Inspect the land and production.
  • Make management decisions regarding farming operations.
  • Work at least five weeks a year and accumulate at least 100 hours.
  • Prove that you are significantly involved in the operation.

 

You must also meet the provisions of the 2/3rds excess federal gross income test. This means that at least 2/3rds of your gross income is from farming.

However, if you find that you don’t meet the gross income test, you may be eligible through the three-year averaging method. This method allows you to take your current year and the two previous years and average them together. If that amount is at least 2/3rds of your gross income, you are eligible for the Agriculture Overtime Credit.

Business Operations that Are Not Considered Farming

The IRS does not consider an individual or business in the industry or farming if:

  • The primary operation of the business and its income is from providing agricultural services. These services could include farm labor, preparing the soil, or providing veterinary care to farm animals.
  • You run a hobby farm or leisure or recreation.
  • You get paid to manage or run a farm.
  • You primarily work in forestry or logging, and those operations are not part of an eligible farm operation.

 

Eligible Overtime for the NY Farm Credit

If you’re an eligible farmer in NY and paid eligible overtime, you should be able to claim the NY Farm Credit. Eligible overtime, starting on January 1, 2024, is for overtime hours that are in excess of 56 hours but aren’t more than 60 hours.

This means that if you had employees who worked 60 hours in a given week, you’d be eligible to receive a tax credit for four of those hours.

  • On January 1, 2026, the overtime credit starts at 52 hours but no more than 60.
  • On January 1, 2028, the overtime credit starts at 48 hours but no more than 60.
  • On January 1, 2030, the overtime credit starts at 44 hours but no more than 60.
  • On January 1, 2032, the overtime credit starts at 40 hours but no more than 60.

 

NY Farm Credit Advanced Payment

NY farmers will get the option to receive an advanced payment for the overtime credit. In 2024, you can claim the credit for any eligible overtime hours worked between January 1st and July 31st by submitting an application to the New York State Department of Agriculture and Markets in September. New York plans to have the application available in early 2024.

It’s important to note that in order to fill out the application, you’ll need to have a NY.gov ID that you received through my.NY.gov.

The Documentation You’ll Need to Submit to Receive the NY Farm Credit Advancement

The NY Farm Credit is dependent on the number of employees who received overtime pay while working on your farm. The New York State Department of Taxation and Finance requires that you keep records of your certificate of Tax Credit, which is issued by the Department of Agriculture and Markets.

You must have a record of your organizational chart, and that chart must include all of your entity names, the percentage of the business that is owned by each entity, and all of their identification numbers.

Your payroll records must also be complete and up-to-date. Those records must include the full legal names of your employees and their social security number or ITIN.

They must also include each employee's start date, termination date, if applicable, their regular and overtime pay rates, the amount you paid each employee for each week, the amount of overtime pay each eligible employee received, all of the hours the employee worked each week and the number of hours worked that exceed the overtime threshold for the tax credit.

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.

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