tax break for selling eggs?

[jnjross]

complicated so compli... i carried the tax books for farming around for months going over and over and... if you're not selling massive amounts don't bother, but if so get a tax id it my be worth it, i have one for our tree farm but not chickens,

 

[jnjross]

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yeah and they get real ticked when weather destroys something! like my greenhouse , i'm sure they'll pay me a visit!

 

[Eastins Eggs]

It takes a lot of eggs and hens to show a profit. Costs are high such as feed, water, electricity, equipment, labor, and insurance yes insurance. Your home owners insurance will not work. We carry a 2 million dollar liability policy. Also check your local, state, and federal regulations. You must also find a market for your eggs.

 

[Mac in Wisco]

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Yes, for income tax purposes it's not very different than any other business. Your taxable profit (or loss) from the enterprise is your gross receipts minus the cost of inputs.

Income from a layer operation is your sales of eggs and possibly manure or compost. Now subtract the cost of birds, feed, bedding, supplies, utilities, labor, insurance, office space, office supplies, mileage related to the business, depreciation on buildings and equipment. What is left is your profit (or loss) that you pay taxes on. If your business is a sole proprietorship you file the appropriate forms along with your personal income taxes. If you show a profit you pay taxes on it. If you show a loss it can offset taxes from your other income sources, but as I said earlier you are expected to show a profit three out of five years. You can't continually apply the losses against your other income.

There are some unique things with a farm business since it can be a family enterprise. You can deduct work clothes used by yourself and your family if they are used as part of the business. You can pay your kids wages and deduct it as an expense. One just have to be careful not to pay them so much that they become liable for income taxes on their wages. You can't just deduct their allowance. It all has to be documented as pay as you would any other employee, right down to cutting them a paycheck.

Again, all of this has to be run in a business like manner. If you don't show a profit or just make up numbers at the end of the year to reduce your tax liability, the IRS will come knocking.

 

[Mac in Wisco]

Some additional thoughts...

In most situations there is no monetary benefit to you when it comes to claiming these things on your income tax return. The IRS makes sure the money only flows one way. Technically, if you make any profit on hobbies you are required to report this as income and pay taxes on it, but you are not allowed to claim losses.

If you do run a for-profit enterprise the IRS will take their share, and allow you to claim losses some of the time, but these losses are limited. It's possible that reporting a small profit on a for-profit enterprise would entitle you to claim property tax deductions that could lower your overall tax liability, but in most situations the money only flows one way.