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
People make money, pay taxes, and spend what’s left.
Corporations make money, spend money, and pay taxes on what’s left.
Everything is usually an exaggeration, but they can stretch it a lot.
Vehicles are pretty easy to include, as they can be used for doing the job, computers and such can be office equipment. You can even claim parts of your home if you do any work there, like a home office, or if you do stuff like farmers markets and do canning.
That said, the IRS does watch. My dad got flagged for an audit a while back. Came back fine as he’s very careful about what he claims, but we did get a funny story out of it.
He claimed a 4 wheeler on his taxes as farm use. Had it down as an ATV. The auditor thought he’d caught a stretch, and demanded we explain how a Television was farm us.
The important thing here is that the tax code is set up to tax PROFIT and not REVENUE. So if you sell 100 chairs at $100 each, that’s $10,000 but the cost of the lumber is $50 per chair, then you get to deduct $5000 from that 10,000. Then you get to depreciate the cost of the machines used over its useful life. So if you buy a $1000 saw you can deduct $100/yr for 10 years (assuming that is the useful life)
You could tell who the subsidized farmers were in our small rural community… all their kids drove year-old “farm” trucks & had fuel accounts at the local Cenex.
If he’s claiming 100% of the house and the vacations then he’s absolutely committing tax fraud and better hope he doesn’t get audited.
Theres pretty clear rules about what and how much you can claim and for things that aren’t purely work related (i.e. housing costs) they can still be eligible but only at a proportional amount to the use for business, like if 50% of your kilometers in a year are farm use and the other 50% is personal, you can only claim 50% of your vehicles expenses on taxes, and you need documentation to support that 50% rate.
But the thing about taxes is it only matters if you get audited. You can claim whatever the heck you want in the meantime but if you’re less than honest that can come with some steep fines and I would assume jail time in extreme cases, should you get audited in the next 4(?) years.
A lot of people lie on their taxes; the extent of those liez depends on the nature of their business, .
A guy I know owns two properties. One is his personal house, the other is his workshop for his business, with a rental property upstairs. A lot of the stuff he buys for his personal house, he claims is for the rental property and writes it off.
Realistically, is the IRS going to be checking if those doorknobs, lightbulbs, extension cords, etc. are really for the rental property?
Yeah I used to be an agricultural electrician and we did resi work on their houses and personal shit all the time and it would just get put on the farm commercial bill so that was definitely shady.
They would also do things like write off side-by-side’s as farm vehicles even though they never did any farming with them. Same with brand new, fully loaded GMC Denali’s as farm vehicles but that thing never went anywhere near any hay or feed or nothing either.
As for how? How do you prove the side-by-side is a personal vehicle and not a farm one. It COULD be used for farming, just isn’t. Same with the truck. Gas and diesel too, government doesn’t know if it’s in your personal vehicle or your farm vehicle.
Also, where I’m from (Ontario) farmer’s are the wealthy elite so they have a lot of money just from being farmer’s so they can afford a lot of vacations and stuff just from having a high income.
I am mostly talking about quota guys (Dairy, chicken) cause the beef and pork guys aren’t AS well off but they do pretty well too.
Many uneducated small business owners write a lot of things off that they are not supposed to.
The tax system is an honour system. You can claim anything. The problem is in 4-5 years when you get your first audit.. then they are in trouble.
Farmers have had politicians advocating for them for centuries, its all a big scam.
Having said that most family farms arent that profitable and all the subsidies and tax breaks keep our stores stocked with food all tear round. Id rather have the system thats currently in place and full grocery stores than not, even if it means there are a percentage of farming families that are rich because of it.
I worry less about work-class people being a bit “loose” the the tax codes. I’m more bothered that billionaires pay less in taxes than 99% of the population. Ditto for churches.
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