Hi thought I'd get everyone going again , it's to quite. How do some other homesteader file ? We filed as a farm the last 2 years and only took legal deductions.We got back alot more money this way . I like to save money too , but this is were its been worth spending it to help.If you sell anything you make you can set your self up as a small buisness of some sort .By doing this you can deduct alot of things ,feed,car expenses,cost of seed,animals,equipment,ect.Its worth looking into I'm glad we did.I would suggest talking to an accountant.Hope this helps someone save money.My ending statement will be " sorry if I misspelled anything or used the wrong grammer ,I have nothing to hide ,I'm not anti IRS ,and i'm not trying to get anyone to do anything illegal.That should cover everything ,now everyone get some of your hard earned money back !Sorry I couldn't resist.

-- Patty Gamble (fodfarms@slic.com), March 24, 2000

Answers

Patty, since we raise cattle, we started filing as a farm a few years ago also. We had a CPA do our taxes and it was well worth the $125 we paid him. We were sure we would have to pay this year but with his help, we got back quite a tidy sum. I highly recommend it. Of course, after you have depreciated everything out it won't be as good but if you buy equipment every year that helps and keep track of all your expenses. The equipment we buy is more than paid for in the return.

-- barbara (barbaraj@mis.net), March 24, 2000.

Good Morning, Patty! It's so good to start the morning with a good chuckle. But what a sad situation if we really have to make disclaimers every time we post something? Just IGNORE the negative and soak up all the wonderful, positive things on this forum. I appreciate the suggestion, too. We have never had enough deductions to bother with, so just file the short form. I think we get stung that way. Next year, I'll look into this.

-- Peg (jnjohnsn@pressenter.com), March 24, 2000.

I might add, which I'm sure everyone knows, you can't do this if you are just "hobby farming" or homesteading. You have to be selling something and trying to make a profit. Our CPA says as long as you can show you are trying to make a profit it is usually ok. Of course, eventually they expect most business too or expect you to get out of it but he said farming rarely makes a profit until you sell out. Hope I never have to do that! We aren't in to farming (for a profit) big time, but what we do sure helps to supplement our income.

-- barbara (barbaraj@mis.net), March 24, 2000.

Patty, you enjoy starting all of this don't you! We also file with a schedule F. We are very deligent about keeping records of purchases, and keep all of our goat feed, chemicials, materials, and income seperated from the dog, hen, cat and the other HOBBY type things we do. We also take a deduction on our property taxes on the percentage of property set aside for the goats, also telephone, electrical, my truck, show expenses, and outside labor I hire to haul hay, clean barns (even if it is you own children). I am sure someone will come and slam us for even filling taxes, but I want to pay my fair share, but no more! I run the goat part of farming like a business and have business cards, stationary, a checking account, advertizement expenses, clothes expenses (shirts with our Logos on them) and breeders fees. We have been lucky enough to make a profit at our Goats this last couple of years. The shame of all of this is not the taxes part, it is the state government, and the fact that my profit from milk sales in Texas, is actually illegal. Vicki (Now brace yourself!)

-- Vicki McGaugh (vickilonesomedoe@hotmail.com), March 24, 2000.

Vicki< doesn't your dog guard your goats ? Don't you sell some eggs ? Sounds like a deduction to me !We do everything on the up & up too .The fun thing is spending the money and saying its a tax deduction,it some how makes you feel better about it .And to some others find something to try to farm its worth it !

-- Patty Gamble (fodfarms@slic.com), March 24, 2000.

I respectively refuse to answer on the grounds it might tend to incriminate me ! If you really want an answer--use your search engines and research Bo Gritz and / or The Posse Comitatus.

-- Joel Rosen (Joel681@webtv.net), March 24, 2000.

Just curious, is the majority of your income from the farm? Does it matter?

-- Jean (schiszik@tbcnet.com), March 24, 2000.

We also filed as a "farm" this year. I read an article in Western Horseman, I believe, which was written by a former IRS agent. He stated that you only have to make a profit 2 years out of 7, and then you just have to prove that you sincerely attempted to make a profit. It is up to the IRS to prove otherwise. We always keep good records, track everything for each animal, etc. Since my husband gets a military retirement, we listed the farm as my endeavor, and it worked just fine. My sister in law is a CPA and also felt it was all perfectly legal. Sure makes a difference when you can deduct the feed and vet bills, equipment (even though it has to be depreciated), etc. You do have to be in business to sell something, though, even if you don't make a profit. Good luck everyone! Jan

-- Jan Bullock (Janice12@aol.com), March 24, 2000.

Patty, I wouldn't be comfortable trying to spin it to an IRS agent that our dogs are strictly guardian dogs, and we do sell some eggs, but we do not have hens as a legitimate business venture. We are extra careful since we also have our own business. Patty you have me so freaked out about my spelling that I looked up legitimate in the dictionary! Vicki

-- Vicki McGaugh (vickilonesomedoe@hotmail.com), March 24, 2000.

Jean ,my husband works off the farm I am a stay at home Mom.99% of our money is from his job.Vicki, dont worry about spelling or anything else .I dont care if spelling or grammer is right .I have more important things to worry about.People who nit pick need to find a hobby .I want to make it clear I am not saying to cheat , only look at your taxes and see if there is any way you can save money.

-- Patty Gamble (fodfarms@slic.com), March 24, 2000.

I've been a-lurking at your conversation for tips. I am tired of owing two years in a row since the IRA Mafia took away the reality deductions. I am rural now, I can apply your tips, and look for more. Thank You, for your kindness.

-- Taxed Out (much@mula.com), March 24, 2000.

We have a CPA who does our taxes for us, works for a reputable firm and is worth every penney we pay him. It is quite legitimate to deduct farm expenses. We have been able to depreciate our equipment and maintenance expenses, project purchases, etc. Agreed it's important to keep accurate expenses in an organized fashion. Very much worth looking into if you can.

We only wish we could designate where our tax money goes.*sigh* And how about a refund on the Mars probe???

-- sheepish (rborgo@gte.net), March 24, 2000.

Meant to say I.R.S., not IRA! Please excuse my lapse.

-- Taxed Out (much@mula.com), March 24, 2000.

Personally I love the IRA in place the IRS. Income tax is crazy to begin with. Check out the sites Joel reccommended. Patty, hats off to you for raising the roof again! I propose that until we are refunded for the Mars probe and all the $700.00 hammers, that we gracefully abstain from enabling the spend thrifts in their habitual irresponsibility. Also, a little publicized item for us to chew on, the money we pay to the IRS goes to the Federal Reserve and then goes overseas to be invested by the wise folks at the World Bank and the IMF, and it IS NOT used to make our roads nicer. That money comes from all the other taxes that are charged in a Constitutionally correct method of taxing. User tax. Let's see where this goes!

-- Doreen Davenport (livinginskin@yahoo.com), March 24, 2000.

YEEEEHAAAAWWWW, DOREEN!!!I agree - let's see what kinda wild ride this forum can take us on!!! You all have got my blood going - it is SO cool to hear from everybody on these issues - I keep learning as I go, and I couldn't ask for a better variety of teachers. I homeschool (love to know if this voucher business would help me and mine - yeah, RIGHT!), and this type of fact/fiction/fantasy forum (mostly fact - just how it's looked at) is ideal for allowing one to sort through it all and make up one's own mind on it. income tax, history, census (don't know if I spelled it right, but SO WHAT) - keep it coming people - just hope I can keep up with it all! Thanks - now I've gotta spend a few days explaining to my 9-yr-old what it all means - but what a great lesson on american history and the uses (and abuses) of our U.S. gov't.

-- Judi (ddecaro@snet.net), March 24, 2000.

Hi everyone,

If you are doing a small business and have a bedroom to spare to set up all the computer equipment, desk, lamp, a phone, any other office equipment to keep records with, guess what you can take a precent off of the house payment to cover the cost of the room, also all of your equipment that you use in your office for that business. If you set aside a real space for an office, and not just the kitchen table this is a tax deduction, be sure to ask the person who prepares your taxes about this.

Keep up with all gas miles spent running to town anytime you go to pick up anything for the business/farm that too is a tax deduction.

Hope these hints add to the tax pool.

Beth (NC)

-- Beth (craig@icu2.net), March 24, 2000.

I couldn't resist this one --Vicki. If you had a dog like mine you wouldn't have to spin any tales to that IRS agent. By the time he reached his car he would know that is a full time guard dog,very good at his job and worth every penny I pay him ! At 3:30 am that is a very amusing picture to me.

-- Joel Rosen (Joel681@webtv.net), March 25, 2000.

Two questions and a comment. 1) Don't farmers have to file quarterly tax returns? My DH says that's one reason I shouldn't try it even though I sell eggs and seriously try to profit from my soap sales. 2) Don't you have to file a schedule SE (self-employment tax -- the WHOLE Social Security extortion)if you file as a farm? If it really isn't that complicated, I have my receipts and all and will go for it. And yes, the income tax is unconstitutional, and use tax is the only fair method of taxation. Alan Keyes is a vocal proponent of this concept and has a good explanation of his view at his website.

-- Nancy Johnston (nancyj@mei.net), March 25, 2000.

Nancy, this is what my DH files on his business. No we do not pay quarterly taxes, no I don't file self employment taxes, in fact when I did the farm and DH had just your run of the mill normal job in the big city I did our taxes and our schedule F. Now with the company I don't dare, I hand in my nice neat folder with all of my deductions and depreciation and my income, and DH turns in his big old box of receipts and logs, she rolls her eyes and it all comes back in a neat envelope. Thank God for H&R Block!!! (If you are going to claim milage and your Farm Vehicle, go down and buy yourself a vehicle log, we get them for free from our gal. They are so handy! Vicki McGaugh

-- Vicki McGaugh (vickilonesomedoe@hotmail.com), March 25, 2000.

We figured out the perfect solution to income tax. We quit our jobs and have no income. Just kidding, to a certain extent... but our reality is that homestead outgoings HAVE TO meet cash in. The tax returns become quite entertaining, as did the recent census form!!! The real problem is that homesteading (year to year survival) is not the same as modern farming (trying to make a profit from the land), and as far as government (at least government accounting) is concerned, homesteading is a thing of the past. Whatever - we certainly don't miss our jobs.

-- David C (fleece@eritter.net), March 25, 2000.

Taking advantage of all legal deductions will reduce your tax bill a lot. Wages to your children for work they can and actually do is a good example. If you can stand to keep the records and take the deductions you reduce taxes. That vehicle log for business trips into town is one of the other great ones. A good experienced accountant or better yet take a few hours yourself and read all that free tax stuff. Once you can over come goooeldy gook (spelling?) it isn't really that hard.

If the IRS thinks you are making a profit from those chickens I hope you have the records to prove otherwise, or they will try to tax the profit they think you should have made. Profit in one of three or two of seven years is a general guide line but even that is not absolutely necessary if there is a demonstrated profit motive.

-- Michael M. McFall (mcfallm@aol.com), March 26, 2000.

All right, I have to do a little expounding. For a group of people predominately interested in self-reliance, I fail to see the compatibility of accountants, and Tax advisors. Doesn't it make sense that if the average person can't figure out the in's and out's of a system that the system is dysfunctional, or corrupt or flat out inapplicable? Keeping records for your own knowledge is worthwhile and understandable, but I wonder how many man hours are spent keeping records for the IRA/S. Is it possible for us to band together and submit a bill for our labor to them? Let's try that one, ha!

-- Doreen Davenport (livinginskin@yahoo.com), March 28, 2000.

Doreen,. Some of us have many enterprises/investments/entanglements (!) in order to finance and support us as we move closer to full self reliance. I see it as temporary. Someday I hope to have enough time to do it all, but for now, it's somewhat more cost effective to pay someone to do taxes or provide tax advice than for me to do it myself. If I had horses I would probably pay a farrier. I pay someone to shear for me (it's so reasonable, and they do it so fast!) As time becomes available, I will continue to learn more skills in order of priority. As it is, the &_#@( tax laws change every five minutes and I would need 6 advanced degrees and 13 months every year to do mine. It could be done, but I'd rather do other things right now. Hey, how about we get the tax laws simplified!! That's a novel concept!

-- sheepish (rborgo@gte.net), March 28, 2000.

Theres an old saying JACK OF ALL TRADES ,MASTER OF NONE! Well thats ok as long as nothing dies ,my house doesn't explode , or my barn cave in , but do you want to full around with the IRS? Good accountants aren't H&R Block they are professionals who do this on a daily basis , there is no way we could ever know what they do .As for me I'll leave my fooling around to at home.

-- Patty Gamble (fodfarms@slic.com), March 28, 2000.

Sheepish, just like your other experts your tax preparer needs to be one that is understanding of your needs. Many take the position that since they may have to go with you if IRS questions you, they would prefer for you not to take any legal items if they are things the IRS might like to question. Colleen and you are both right about the time wasted. They publish the "hours required" for each form and it is usually about half what the average person would need. I was a CPA and still get called on by friends to help them out though I am no longer in that field. Good luck, if the IRS simplifies it just means the next instructions will be more confusing. I have a friend who's last CPA has cost her a significant amount by not asking the right questions and suggesting alternative ways of doing things. I am currently involved in helping her prepare returns for 1997 thorough 1999 and hope to get her sizable refunds.

-- Michael M. McFall (mcfallm@aol.com), March 28, 2000.