Tax time is coming...

[hrselady]

I really hate to bring up the topic of taxes... but honestly I'm looking forward to it this year. I start in Dec going through mounds of receipts from the past year.. everything from feed, vet, farrier, EVERYTHING!!! What are some other deductions that can help during this time? We built a barn.. ran fence.. cleared property to fence..etc. Whats available to small farms?

This is a very sincere Thank you to all who have done this over the years and share their knowledge with the rest of us!!!

Mendy

 

[zoey829]

We are allowed to deduct part of our electric, gas, fuel, tolls etc. Certain clothes can be deducted. Fees for registration, farm tax, interest on our vehicles. If I think of more I will post.

Good luck.

 

[Miniv]

A lot will depend on if you are considered a hobby or a business............An accountant who knows horse ranches/farms is best to advise you.

Feed, bedding, vet expenses, meds, farrier, horse registry expenses, show expenses, truck mileage, advertising (including business cards), should all be accounted for. But only a portion is deductible.

As a business, the accountant will figure out depreciation on your horses, the barn, fencing, etc. It's not simple.

 

[Charley]

Talk to your tax person/accountant. Taking a deduction for a loss year after year, or taking expenses with little or no income can pull your return up for audit. With horses, I've always heard, you need to show a profit four out of seven years to be considered a business.

 

[hrselady]

Our CPA told us we could show a loss for the first 5 years, said it was considered your startup years. I am just trying to get everything in order and I am sure I'm not the only one wondering these questions. Has anyone else started getting their papers ready? I am just making sure I'm covering everything. Thanks for all the input.. did make me think of a few more I need to be looking for.

 

[runamuk]

Our CPA told us we could show a loss for the first 5 years, said it was considered your startup years. I am just trying to get everything in order and I am sure I'm not the only one wondering these questions. Has anyone else started getting their papers ready? I am just making sure I'm covering everything. Thanks for all the input.. did make me think of a few more I need to be looking for.

Claiming a horse enterprise is less straightforward. Horse tax shelters were common in the 1980's and then they were stopped by new laws. Make sure your accountant knows their stuff. As for normal deductions for livestock enterprise...feed, vet, housing, fencing, butchering, fuel, marketing, salebarn, advertising, showing, licensing, tagging, inspecions, chemicals, fertilizers, home office, crp, and plenty more....... horse enterprises often recieve more scrutiny than others so make sure you have hard copy of all deductions, and a good accountant can make or break you. Typically you want to show 2 years profit for 7 years of operation and most businesses assume 3-5 year startup. The main issue is having a good business plan showing the profit making goal, should you be audited.

 

[hrselady]

We file it as farm.. not really an enterprise.

 

[Basketmiss]

Our CPA told us we could show a loss for the first 5 years, said it was considered your startup years. I am just trying to get everything in order and I am sure I'm not the only one wondering these questions. Has anyone else started getting their papers ready? I am just making sure I'm covering everything. Thanks for all the input.. did make me think of a few more I need to be looking for.

Yes I am also getting mine ready.. It is a good thing you are so organized!

I have all my receipts together (keep them together) this is my first year with horses so have to see what my accountant says.. I have heard you can do a hobby farm if you just have them for yourself, no income, hence hobby, and can deduct... I am gonna call my accountant today..

 

[Charley]

Hobby income is deductable only up to the hobby income that you have. You cannot take a loss.

 

[MinisOutWest]

cats, feed, vet bill- they are exterminators for mouse and bird extraction, same with the dog- food and vet bills, they are for security for the place. the horses, barn, computers, internet service, horse insurance, entry fees, show clothes, memberships, magazines, phone bills, web site design, interst on credit cards, depending on how the acct sets you up, either by mileage or actual receipts for gas, oil changes, maintenance, insurance, interest on auto loan, oh yeah, mobile phone, food for horse shows, food for doing anything horsey related, cleaning of show clothes, advertising, any clothing for advertising your farm, biz cards,

oh look what I got in the mail, 29 page thing from my acct

things i forgot

-delivery, freight, postage, bad debts, bank charges, contract labor, other interest, janitorial, legal and professional, office expense, outside services- like clipping, sharpening blades, parking and tolls, printing,rent- like stalls at shows, repairs, oh look- security, meals(50%) for me only, or 100% when I have a client with me., then I add paypal and ebay fees to it too.

dont forget the manure spreader, 4 wheeler, tractor, phones you use in the house and barn, stall curtains go under supplies, or can go under advertisement, chairs at the show, trunks, tables, my scooter, video camera, digital camera, camera cards, fencing, materials for barn, barn improvements, signage, all your carts, harnesses, halters,

whew, I am out of breath, now you got me in the mood to start working on mine, ha ha

 

[Basketmiss]

Ok I talked to my accountant today and she said NO on the hobby farm. She said the IRS doesnt like horse owners ina tax type of way, so you will get audited if you file as a hobby farm.

Also said the only way to is if you breed or show or make money, even stud fees, selling foals, etc, then you can claim your expenses and such.

she said the IRS thinks the horse market is a scam and thats why they are auditing and watching closely anyone who uses horses as expenses...

Just wanted you to know what I found out.

I personally only have 2 horses, geldings, so no babies, and we love them but dont show.. So I guess I cant deduct any of my expenses!! Oh well, I love my 2 boys , thats ok..

She said owning a horse is like going to a movie, you get to see the movie but dont get anything for it as a deduction...

 

[The Simple Life Farm]

Since we have had our horses, we haven't owed the IRS.

It would probably help you alot financially if you went to just a few shows each year. Just look at the endless list Angela gave, you can deduct almost everything under the sun!!!!! I know I save a huge amount on taxes compared to what the shows cost.

I got my tax stuff ready 3 weeks ago, just waiting on my W-2 now from the employer. I want mine to be the first one in, already got plans to use the money for more fencing and a small barn (finally).