I live next to farmers. Everything they do and own is a business expense. The business owns everything. Home, cars, utv, electric, propane, internet, new land, gas, desiel, and red desiel. They go on multiple caribbean vacations, rent out the banquet room and claim it as a business expense. Is this really what business are able to do?
In: Economics
There’s multiple forms for filing taxes. 1040 is the basic for personal taxes, which has some variations. But there are additional forms to decide income and losses from specific activities.
There’s a lot of differences in structure depending on the state. The process for things that are shared for both personal and farm use is decided by assessing a percentage of the value between business use and personal use. So if the property taxes of a farm property is $2000, you might calculate that 75% of the property is farm use and therefore $1500 is deductible as a farm expense and $500 deductible as a personal expense.
There’s a lot more that can be deducted as a cost of doing business that you can’t deduct personally, but there are also restrictions as well. By the book, you need to report that usage for vehicles, but you can also keep a old beater available to say that you have a personal vehicle to use if you needed to.
These expenses don’t reduce taxes, but they do reduce the income used to calculate adjusted gross income, which reduces the number that taxes are based off of.
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