Hey Does anyone claim their farm as a business?

Discussion in 'Random Ramblings' started by HennysMom, Dec 7, 2008.

  1. HennysMom

    HennysMom Keeper of the Tiara

    Okay - so..how many of you claim your homes/farms as a write off for tax purposes and how do you do it?

    I believe in VA its that you have to have over 5 acres to be considered a farm and we are squeaking by [​IMG] if that is the case - we'd like to register so that we can take the benefits of write-offs when we sell our produce, fruit, eggs, and products as well as feed, supplies, cost to run the place, etc over the course of the year but we aren't sure WHO to contact to 1. register our place as an "Inc." and 2. how to go about doing so/where the laws are.

    I've looked on IRS as well as Dept of Ag but I cannot find anything. So... anyone know?

    Thanks in advance!
     
    Last edited: Dec 7, 2008
  2. lockedhearts

    lockedhearts It's All About Chicken Math

    Apr 29, 2007
    Georgia
    We have, for years. We breed & Show horses, Dogs and now the chickens. Here in Ga if you are sole proprietor you do not have to be "INC" or anything. I do my own taxes using Turbo Tax, I pay $40 per year for audit protection through them. I use the Farm Schedule along with my 1040. Hubby and I have always worked outside the home. I keep every receipt and have monthly sheets that i list income & expenses on plus I have a Monthly Summary.
    It takes a lot of time, but my tax guy charges $500 for business taxes, I just did a lot of reading and did it myself.
     
  3. HennysMom

    HennysMom Keeper of the Tiara

    locked - where do I find out info on how to do it and sole prop vs. Inc.? Also, I know there is a stipulation on acreage...would it be Dept of Ag..do you know? Know you're in another state but it should be pretty much the same for many things... I think.

    thanks for responding [​IMG]
     
  4. RockyToggRanch

    RockyToggRanch Chillin' With My Peeps

    May 22, 2008
    Upstate NY
    Every time I go to TSC they ask if I'm tax exempt. Oh how I wish I could say YES.
     
  5. greyfields

    greyfields Overrun With Chickens

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    Get a business license.
    Get an IRS tax ID number.

    Then visit your county assessor should have information on getting your property taxed reduced.

    Just a warning, though. If you don't show a profit in 3 years, they'll consider it a 'hobby' and nail you for the previous year's taxes. This includes property taxes and any deductions you made on your income tax for your business.
     
  6. Katy

    Katy Flock Mistress

    I was always told to qualify to file as a farm as far as federal income taxes a certain percentage of your income had to be agricultural income. 100% of our income is from sales of grain and cattle so I've never really had to worry about it. My BIL used to be strictly farm income, but then bought some rental properties and his wife went to work off farm and he no longer qualifies to file as a farmer since more than 50% of his income is off farm income. I'll gladly continue to pay our CPA to figure it all out!!
     
  7. HennysMom

    HennysMom Keeper of the Tiara

    really grey - why? Most business's dont show a profit for at least the first 6 years no matter what they are... we used to own an antique business and we were always in the red [​IMG] well - at least for the first 3 years we were, then it got to be too much and we got out of it....

    Thought too as a hobby you could do up to 10K and be exempt in taxes...?? Or it used to be that way - we used to sell on eBay and it was that way...of course that was a few years ago but its what our accountant told us as well. Did things change?
     
  8. cubalaya

    cubalaya Overrun With Chickens

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    we have a 15 acre farm in va selling shiitake mushrooms, plants and flowers from our greenhouse, akc beagles and chickens, eggs and chicks. this is our first year of claiming the farm but they told me we had to do 1500 dollars to claim the tax exempt. that should be no problem unless the economy gets so bad that people stop going to farmers markets.
     
  9. HennysMom

    HennysMom Keeper of the Tiara

    1500 a year or a month? Did they state how much land you had to have as a minimum by chance? I saw somewhere (gosh sure cant remember WHERE I saw it..wish I could..I'm going nuts here [​IMG] ) that in VA it had to be 5 acres or over 5 acres - if thats the case we qualify either way...

    I'm still searching the net trying to find it..but Dept of Ag isnt very helpful - there's TONS of stuff there and nothing very specific *sighs*
     
  10. Leah-yes I know I'm crazy

    Leah-yes I know I'm crazy Chillin' With My Peeps

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    Sep 24, 2008
    Skidway Lake, MI
    When talking about federal taxation it has nothing to do with state laws. All that matters to the irs is taxable income. They do not care the size of your place or what you are growing, but the potential to collect at your mariginal tax rate. The state laws refer to zoning and land use regulations.

    Say, I made $400 dollars selling eggs and it cost me 300 to do it, they would collect tax on 100.

    Now, if I made 400 and said it cost me 3000 to do it and tried to pay less tax every year on my other income (from my outside job) after my gains and losses were combined that would look like I have a very expensive hobby that I am trying to use for the purpose of fraudulently avoiding paying income tax.

    In order to file a schedule F I have to be able to show a profit or the likelyhood of future proffit. There is a five year rule, that takes into account that farms are not likely to be in the black at the beginning, or every year for that matter.

    Here is a link for anyone interested. Page 26 & 27 discuss the difference between farming for profit and hobby farming.

    http://www.irs.gov/pub/irs-pdf/p225.pdf

    Sorry this post is so long.
     

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