Does anyone else involve ducks in their taxes? I haven't been around much in part because it's tax season and that's my job, but I'm planning to make my pets a little profitable and tax deductible. Anyone else?
Ducks & Taxes
- Thread starter enriquec
- Start date
That's interesting. I never thought about it. I don't know enough about taxes to know what to do or how to do it anyway, but still interesting.
How do you manage to do that? Don't you need a business or agriculture except? In in TX so I don't know if that matters.
- Dec 22, 2009
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How many birds do you have? I don't think much could be done exemption wise for a small backyard flock.
- Thread starter
- #5
I have 12 but doesn't matter. "purpose" does. State law doesn't typically affect federal returns. But I live in Florida so state returns are rare for me.
If ducks are intended for profit, it's business. Great tax perks typically. Same would apply to a dog breeder for example.
If ducks are intended for profit, it's business. Great tax perks typically. Same would apply to a dog breeder for example.
Ahoy,
I have been looking at the Agricultural Tax exemption for my flock of 21 rare breed ducks. I have yet to do anything about it other than pick up the application and ask a few neighbors. According to the Lake County, FL application, the details are pretty specific for other livestock, but when it comes to poultry it says "case-by-case" basis.
Some advice I've been given has been to show a "purpose" and write up a business plan. I'm thinking conservation of the breeds (Cayuga & Welsh Harlequin), sale of the eggs, and for educational purposes (I have some teaching certifications and experience). This way when I do submit my farm exemption application, I can include these things to give it validity.
The other tidbit was to establish the hobby farm as a business somehow, then save on taxes by claiming all my supplies as business expenses. A neighbor suggested that if he gives me $1 to let his horse graze on my property, then I can show that my property earns money as something of a farm and can get the exemption. We suspect another neighbor has a handful of goats just to make the same claim. I'm hoping if a handful of goats qualifies him for the agricultural exemption, then 21 (or more) rare breed ducks should do the same for me.
Good luck,
Rich
I have been looking at the Agricultural Tax exemption for my flock of 21 rare breed ducks. I have yet to do anything about it other than pick up the application and ask a few neighbors. According to the Lake County, FL application, the details are pretty specific for other livestock, but when it comes to poultry it says "case-by-case" basis.
Some advice I've been given has been to show a "purpose" and write up a business plan. I'm thinking conservation of the breeds (Cayuga & Welsh Harlequin), sale of the eggs, and for educational purposes (I have some teaching certifications and experience). This way when I do submit my farm exemption application, I can include these things to give it validity.
The other tidbit was to establish the hobby farm as a business somehow, then save on taxes by claiming all my supplies as business expenses. A neighbor suggested that if he gives me $1 to let his horse graze on my property, then I can show that my property earns money as something of a farm and can get the exemption. We suspect another neighbor has a handful of goats just to make the same claim. I'm hoping if a handful of goats qualifies him for the agricultural exemption, then 21 (or more) rare breed ducks should do the same for me.
Good luck,
Rich
Be careful, you can't just 'claim' it's a business, you have to intend to make a profit over expenses within like 5 years or so, or else they throw it all out and you get charged back taxes....and they rule it a "Hobby'....I know about some horse breeders who tried to do that....and because it wasn't 'serious' about being profitable...it was ruled a Hobby.
- Thread starter
- #8
Err I'm still in work mode. So:
Taxes can be a confusing topic. And there are many different types. I specialize in federal income taxes. State income taxes differ and Florida has none. @Richb353 is referring to property tax.
I recommend looking up local court cases, asking others, or the county in your case for property tax.
For property and income tax, @mominoz has the right idea. I prefer to help my clients have valid tax perks instead of appear to do so.
"Getting away" with a tax break is common. It may even be possible to get away with the idea of conserving a very popular and avalable breed, while also selling their eggs as food, and showing a dollar of income. Even with a business plan that includes the word "educational" which, statistically, increases governmental validity.
There is no clear line labeling a hobby vs business. But it's attempted. Showing profit in the last 2 out of 5 years is a common IRS guideline. But many clients of mine, and (especially agricultural) businesses show losses many years in a row an are not considered a hobby. Look at General Motors.
Intent plays a large roll as well. Most businesses don't start off profitable. In fact, it typically takes years to show a profit. Most fail before ever doing so.
They say if you do something you love you'll never work another day in your life.
If I was advising the interested prior poster, I would ask, why only charge $1? Ask your neighbors what they think grazing worth. Charge them a fairer amount. You were an educator? Visit a school or use your networking. I'm sure you can find teachers interested in buying eggs and sharing the incubation experience and life cycle lesson with students. Baby ducklings are also a popular buy online for a variety of reasons. Adults make great pets and meals.
Many biz owners are not great at running a biz. But they intend to profit. When you're making money, it can be difficult to know how much without the education or training of a professional. Cash flow can be tricky. Some times it may appear business is booming, and the next day you realize you're in so much debt you have to shut down.
Unfortunately, entrepreneurs can't always afford these resources. On the plus side, sometimes things aren't as bad as they seem. Especially for taxes purposes.
In accounting, it's common, and legal, to use multiple books. For most purposes, you want to show high profits. But for taxes, you want to show low profits.
As an example, for tax purposes you might be deducting 56 cents a mile driven; a portion of property expense as business that would otherwise have been regular personal expense, etc. You may very be profitable while showing tax losses.
The moral is, put more effort into making money than scheming. Make it real. You might not put the same effort as someone doing it as their only source for income but enjoy what you're doing and pay someone good to do your taxes
Taxes can be a confusing topic. And there are many different types. I specialize in federal income taxes. State income taxes differ and Florida has none. @Richb353 is referring to property tax.
I recommend looking up local court cases, asking others, or the county in your case for property tax.
For property and income tax, @mominoz has the right idea. I prefer to help my clients have valid tax perks instead of appear to do so.
"Getting away" with a tax break is common. It may even be possible to get away with the idea of conserving a very popular and avalable breed, while also selling their eggs as food, and showing a dollar of income. Even with a business plan that includes the word "educational" which, statistically, increases governmental validity.
There is no clear line labeling a hobby vs business. But it's attempted. Showing profit in the last 2 out of 5 years is a common IRS guideline. But many clients of mine, and (especially agricultural) businesses show losses many years in a row an are not considered a hobby. Look at General Motors.
Intent plays a large roll as well. Most businesses don't start off profitable. In fact, it typically takes years to show a profit. Most fail before ever doing so.
They say if you do something you love you'll never work another day in your life.
If I was advising the interested prior poster, I would ask, why only charge $1? Ask your neighbors what they think grazing worth. Charge them a fairer amount. You were an educator? Visit a school or use your networking. I'm sure you can find teachers interested in buying eggs and sharing the incubation experience and life cycle lesson with students. Baby ducklings are also a popular buy online for a variety of reasons. Adults make great pets and meals.
Many biz owners are not great at running a biz. But they intend to profit. When you're making money, it can be difficult to know how much without the education or training of a professional. Cash flow can be tricky. Some times it may appear business is booming, and the next day you realize you're in so much debt you have to shut down.
Unfortunately, entrepreneurs can't always afford these resources. On the plus side, sometimes things aren't as bad as they seem. Especially for taxes purposes.
In accounting, it's common, and legal, to use multiple books. For most purposes, you want to show high profits. But for taxes, you want to show low profits.
As an example, for tax purposes you might be deducting 56 cents a mile driven; a portion of property expense as business that would otherwise have been regular personal expense, etc. You may very be profitable while showing tax losses.
The moral is, put more effort into making money than scheming. Make it real. You might not put the same effort as someone doing it as their only source for income but enjoy what you're doing and pay someone good to do your taxes
Enriquec gives good advice. I am in Canada now, where rules on small businesses are more lenient, but I am from the US and have started a business there that eventually failed, still teaching me many lessons, and as well worked as an accountant in the US.
The federal tax code does say that a new business has to make a profit in 2 of the first 5 years. My understanding is that afterwards, lose away, like GM. It is extremely difficult to make money in the first 5 years, I eked out breaking even in my farm business last year, which was year #7 of claiming my farm expenses (Canada doesn't have the 2 out of 5 rule.) I would suspect that showing intent has to have some action behind it other than just an idea. For example, you post signs up or build a farm stand and attempt to sell eggs. If they're meat birds, you have most of your birds processed. So okay, after you pay for the feed, processing, etc., you lose money, but at least you have tried.
Deducting poultry expenses because of the preservation value or educational purposes would probably not be considered a for-profit venture. There are other parts of the tax code that address not-for-profit businesses, but these reasons would probably not meet the intent to make a profit test. At a minimum, you would need some written plan that ties the ducks to some school's curriculum and have a relationship with a school where you do make school visits. Having said all that, if you are truly passionate about the conservation and education purposes, it is worth exploring setting up a not-for-profit business. The reason is not for the tax deductions but then you could apply for grants that give you money to support your cause, and the not-for-profit part would mean that the grant money would be tax-free. With hindsight, I should have set up my company in the US as a not-profit, it was much more suited to that intent and probably would have gotten grant money if I had approached it that way. It does a lot of time and information to do this, it is not entered into lightly.
I know this must sound discouraging, but if you go the route of treating your ducks like a business (I do,) it imposes on us the discipline of always trying to make sound financial decisions. Where I live, and I suspect the US is the same, duck meat and eggs are much rarer than chicken meat and eggs, so there is good money to be made in ducks. There is absolutely no money to be made here in chickens, so I keep a small layer flock for eggs for me and make a bit of money selling chicken eggs. I could never make the money necessary to keep my farm going on just chickens, but the addition of the ducks means I can (plus I just love the antics of the cuddly wuddly ducks!)
The federal tax code does say that a new business has to make a profit in 2 of the first 5 years. My understanding is that afterwards, lose away, like GM. It is extremely difficult to make money in the first 5 years, I eked out breaking even in my farm business last year, which was year #7 of claiming my farm expenses (Canada doesn't have the 2 out of 5 rule.) I would suspect that showing intent has to have some action behind it other than just an idea. For example, you post signs up or build a farm stand and attempt to sell eggs. If they're meat birds, you have most of your birds processed. So okay, after you pay for the feed, processing, etc., you lose money, but at least you have tried.
Deducting poultry expenses because of the preservation value or educational purposes would probably not be considered a for-profit venture. There are other parts of the tax code that address not-for-profit businesses, but these reasons would probably not meet the intent to make a profit test. At a minimum, you would need some written plan that ties the ducks to some school's curriculum and have a relationship with a school where you do make school visits. Having said all that, if you are truly passionate about the conservation and education purposes, it is worth exploring setting up a not-for-profit business. The reason is not for the tax deductions but then you could apply for grants that give you money to support your cause, and the not-for-profit part would mean that the grant money would be tax-free. With hindsight, I should have set up my company in the US as a not-profit, it was much more suited to that intent and probably would have gotten grant money if I had approached it that way. It does a lot of time and information to do this, it is not entered into lightly.
I know this must sound discouraging, but if you go the route of treating your ducks like a business (I do,) it imposes on us the discipline of always trying to make sound financial decisions. Where I live, and I suspect the US is the same, duck meat and eggs are much rarer than chicken meat and eggs, so there is good money to be made in ducks. There is absolutely no money to be made here in chickens, so I keep a small layer flock for eggs for me and make a bit of money selling chicken eggs. I could never make the money necessary to keep my farm going on just chickens, but the addition of the ducks means I can (plus I just love the antics of the cuddly wuddly ducks!)
Thank you for all the excellent advice. The more research I seek on hobby farms, the more information that pops up on turning a profit. Not likely in the near future, but if I can break even from what I spend on duck food each month I would be satisfied. I have looked into buying the supplies to set up a booth at a few local farmer's markets. In the meantime, I am pleasantly surprised at the amount of eggs the girls provide. Family, friends, and coworkers all benefit.
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