Claiming Flock Keeping Expenses on 2012 Taxes

[happyhens120]

Hi y'all... I'm considering claiming my chicken expenses/income on my taxes this year. Do any of you do this? I'm not officially a "business" but I do sell eggs for eating and for hatching, as well as baby chicks. If you can lend any insight, that would be great. Thanks!

 

[RedDrgn]

If you're selling eggs to anyone, you had better be sure that you are doing so in compliance with all Federal/State/Local regs (and you may be surprised how many there are) before you even think about claiming anything on taxes. A local woman near us used to sell eggs by the roadside and got her butt shut down because she was not keeping the eggs at the correct temperature (even though they were fresh eggs...like collected that morning fresh), and even though she had been selling them that way and in that place for years. As soon as she added them for taxes, she was inspected (which technically isn't a bad thing since not everyone is very ethical about food storage/handling) and failed. She then flat out refused to change her methods, sold her entire flock, and was done.

 

[happyhens120]

Wow! Do you know where I can find those regulations? I have a mini fridge that I keep my eggs in, I clean and sanitize them all, and I really only sell to friends at work... Does the state regulate the sales of chicks? Maybe I could just claim them instead...

 

[RedDrgn]

I'd recommend starting with your local health department. They're probably the primary entity you'd need to deal with, and if there is anyone else, they'd probably know who.

 

[pips&peeps]

You will also have to pay any applicable State Taxes and report the income also. It's not so easy just to write off the expenses; you have to actively be a business. You may also need a business license in your State.

 

[happyhens120]

Ok I just got off the phone with PA Bureau of Food Safety, and she email me all the regulations I need. She said since I'm selling from the farm instead of at a retail location, I am not subject to inspection as long as I follow the guidelines that she sent me. I already meet all the criteria, so now I just need to find out about tax information, if I need a small business license to claim them, etc. I'll keep doing some digging and let you know what I find out...

Here are the small flock producer guidelines for PA:


EGGS FROM SMALL FLOCK PRODUCERS

Many individuals with small flocks of laying hens prefer to market their own eggs. If an
egg producer has less than 3,200 laying hens and sells eggs within five days from the
date of lay and sells eggs predominately within a 100 mile radius of their production or
processing facility, then the following summary of regulations will apply when selling
eggs to the consumer.

All eggs must be maintained at 60°F or less from the time of gathering to the time
of sale. This would apply to eggs sold on the farm.

• At any location, each carton, flat, or container of eggs must be labeled with the
following information:

• Name and address
Date of lay
Statement of identity (eggs)
Net Contents (in 3/16 inch high letters)
"Keep Refrigerated"
Egg Handling Instructions

If a producer does not weigh the eggs or if they are mixed sizes, and they do not
wish to assign a grade, they must be labeled “unclassified” for size.

Must remove dirty, leakers, or loss eggs.

Eggs must be PA Consumer Grade B to be able to be used under Food Code
Chapter 46. Grade B has to do with the quality of the egg only. Inferior eggs may
not be used.

Eggs “unclassified” for size may be used, as long as they are Grade B or better.

Eggs from small flocks, meeting these requirements, may be purchased by Food
Processors or Restaurants for use in their manufactured products/facilities.

Once purchased, the eggs must be placed in a cooler maintained at 45ºF ambient air
temperature. This would apply to all Retail Locations including Farmers Markets
off the farm.

If you feel that an egg producer is not a small flock, gather the producer/farm name,
address and phone number, then contact an Egg Inspector who will verify small
flock requirements.

 

[RedDrgn]

That sounds pretty reasonable! Yes, keep us posted.

 

[amorrill]

If food is taxed in your state, you may also have to pay sales taxes. As long as you are legit with the state to sell the eggs, I think the write off is a marvelous idea. I used to have an in home business, and was able to demonstrate a financial loss for several years, which really helped my tax returns. I was legit, I do not recommend running a tax scam by any means, but start up costs can really add up, not to mention utilities, space, mileage etc. You can only get away with showing a loss for so long though, before they will start expecting you to pay a tax on your income. If you are still not in the black, you might be setting yourself up for an audit.

 

[happyhens120]

PA doesn't tax on food unless it's food that's been prepared (at a restaurant or pre made from a grocery store) so no tax on eggs. I would just really like to claim this for a year or two to try to recoup some of the losses I've had with getting started...

 

[amorrill]

Sounds smart to me.