Beginning in tax year 2018, this credit is expanded to include property tax credits for farmers to include a trustee or a trust established by the taxpayer and rented to a member of the taxpayer’s immediate family. See Form IT-217, Claim for Farmers’ School Tax Credit, and its instructions.
An individual or an estate or trust engaged in the business of farming may be entitled to an income tax credit for the amount of eligible school district property taxes paid on qualified agricultural property. In addition, if a partnership (including a limited liability company treated as a partnership), a New York S corporation, a New York C corporation that has a special gross income from farming election on Form CT-47.1, Election or Termination of Election to Deem Income for Purposes of the Farmers School Tax Credit, or an estate or trust is engaged in the business of farming or owns qualified agricultural property, an individual or an estate or trust that is a partner, member, shareholder, or beneficiary of the entity may be entitled to the credit. If the credit exceeds the taxpayer's tax for the year, the excess credit will be refunded, without interest.
For more information concerning this credit, you may request a copy of Publication 51, Questions and Answers on New York State Farmers School Tax Credit.
Purpose of form
Form IT-217 is used to determine if you are eligible to claim the farmers school tax credit and to determine the amount of the credit. If you are engaged in the business of farming (see Definitions below), complete Part 1 of Form IT-217 to determine if you are eligible to claim the farmers school tax credit.
You are engaged in the business of farming if you cultivate, operate, or manage a farm for gain or profit, even though the operation may not produce a profit every year.
You are engaged in the business of farming if you are a partner in a partnership, a shareholder in a New York S corporation, a shareholder in a New York C corporation that has a special gross income from farming election, or the beneficiary of an estate or trust that operates or manages a farm for gain or profit.
You are also engaged in the business of farming if you rent your farm property to another person who uses the property in agricultural production, and the rental arrangement meets one of the following conditions:
The amount of the rental is a crop share (shared rental agreement); that is, the amount of rent is based upon the actual production of the land, whether paid to you in cash or in kind; or
You have an arrangement with your tenant for your participation in the farm business, and you meet one of the following four tests:
Test 1 You do any three of the following:
(1) Pay or stand good for at least half of the direct costs of producing the crop;
(2) Furnish at least half of the tools, equipment, and livestock used in producing the crop;
(3) Consult with your tenant; and
(4) Inspect the production activities periodically.
Test 2 You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise.
Test 3 You work 100 hours or more spread over a period of five weeks or more in activities connected with crop production.
Test 4 You do things which, considered in their total effect, show that you are materially and significantly involved in the production of farm commodities.
Farming includes the operation or management of livestock, dairy, poultry, fish, fruit, fur-bearing animal, and vegetable (commonly referred to as truck) farms. Farming also includes the operation or management of plantations, ranches, ranges, and orchards.
For example, farming includes, but is not limited to, the raising or production of the following commodities:
- Field crops, including corn, wheat, oats, rye, barley, hay, potatoes, and dry beans;
- Fruits, including apples, peaches, grapes, cherries, and berries;
- Vegetables, whether raised conventionally or hydroponically, including tomatoes, snap beans, cabbage, carrots, beets, and onions.
For more information go to http://www.tax.ny.gov/pit/credits/farmers_school_tax.htm