farm-like-a-billionaire-harvest-tax-breaks=farm-tax-deductions
Farm taxes
One back-to-the-lander I know, who was about to pay an income tax of $200 last year, suddenly wondered: "How can anyone as poor as I am be liable for so much tax?"
How? Not at all. A couple evenings spent with a paperback tax guide soon showed that this very same individual was entitled to several previously undreamed of exemptions.. . enough, in fact, to allow our homesteader to both save the $200 and receive an additional $200 refund on taxes already paid!
It could be well worth your time then to invest two dollars and a few hours in a paperback tax guide of your own . . . in the meantime, the following short article should give you some ideas about where to begin looking for tax saving. —MOTHER EARTH NEWS
In my first-time-farmer dealings with the IRS last year, I learned a rather startling fact: Seasoned agriculturalists and new back-to-the-landers alike frequently pay more income tax than they should. There's a good chance that you're making the same mistake, too . . . so here's a few ideas that may legally save you some money when you "pay up" to Uncle Whiskers this year.How? Not at all. A couple evenings spent with a paperback tax guide soon showed that this very same individual was entitled to several previously undreamed of exemptions.. . enough, in fact, to allow our homesteader to both save the $200 and receive an additional $200 refund on taxes already paid!
It could be well worth your time then to invest two dollars and a few hours in a paperback tax guide of your own . . . in the meantime, the following short article should give you some ideas about where to begin looking for tax saving. —MOTHER EARTH NEWS
To claim deductions for a farm you have to be able to prove your intention to make a profit. No subsistence farmers allowed. But even if you make no money on your place, you can still claim deductions if it looks like you're trying to—or are getting ready to—make a profit. Repairs, maintenance of buildings and tools, cost of fertilizers and lime, land clearing, preparation for planting, erosion control: Money spent for any of these expenses may be deducted.
You may also depreciate (over a number of years) new buildings, equipment, and livestock. The portion of car or truck expenses attributable to farm work is depreciable.
If your agricultural operation is close to the subsistence level, it probably won't pay you to claim that the $50.00 worth of vegetables you sold last summer qualifies your undertaking for IRS tax filing as a business. But if you spent $400 on a plow, $200 on livestock, $500 on repairs to the barn roof and $60.00 on manure for the field . . . it might well pay you to claim your farm as a business so that you can take advantage of the deductions. The big professional farmers know all about this . . . and if you're just getting started and are operating on a small scale, there's no reason why you, too, should not deduct everything that is reasonable. Just don't try to claim your dogs as livestock!
OK. Suppose you work your place for two years with friends and then have to split for the city to earn some additional money. All of a sudden (after two years of floating free) you have heavy income taxes to deal with. One way to ease that burden is to do your splitting in June, so that the tax is divided between two years. If you do have to earn all your bread in one fiscal year, however, you can average the income over a five-year period.
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