Oh it’s that time of year! Every year I say I am going to be better organized and then, well, I use the same blue folder. Ugh!
I have done my taxes, and now the farm taxes, for years. First, let me preface that I am not a tax professional. Take this blog with a grain of salt as I can’t bail you out if the IRS shows up. Hahahaha! But really, here are some things I have learned.
#1. Farming won’t keep you from owning taxes. Don’t use your farm as a tax write off. If you are, you are in this for the wrong reason. Sure, some years it makes our tax situation a little better but doesn’t make up for the long nights, back pains, screaming matches, or fights, I mean discussions with the husband.
#2 Most of the things you do on the farm are expenses. There are the obvious: food, supplies, electricity, shearing, medical, fleece processing, and sooooo much more. Don't forget about tracking your miles to the feed store, the supplies you use in your on-site/on-line farm store, and memberships to AOA, CABO, and your local Chamber. The list can go on and on.
#3 If you have hired help and pay them over $600 during the calendar year, you will need to issue them a 1099. You can find 1099s on the IRS website. If you self-prepare your taxes, most software can produce them for you. Next blog will be on insurance for the farm including employees.
#4 Organization Mine organization is crappy! Remember the blue folder?? Well we cram receipts into it throughout the year. Then come tax season, I sort them out by category and begin the pain staking process of comparing the totals to the spreadsheet I keep. Lesson...DON'T USE THIS METHOD. Use a software like QuickBooks. One day, I will do this and take my own advice.
#5 Wine. If wine is not your drink of choice, find one. Taxes will try your patience. Or you can drink it to celebrate you not owing the government! And remember, if you get in over your head, hire a professional! #CPA
Happy Tax Season!