Tax Question

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The IRS watches farm related activites very closely because this possible deduction has been abused in the past by individuals who simply wanted to invest in some land as part of other business activities but who had not intention of trying to turn a profit. As to whether you can write off the expenses or not depends on a number of items ... first of all did you make any money (show any income that you have to report to the IRS) if you had income, then you can write off the expenses but most likely only up to the level of the income generated by the activity. In short, you will have a very difficult time convincing the IRS that you legitimately anticipated earning a profit on your 4-H project which means that this activity falls into the not-for-profit heading. Under this heading you can claim losses up to your income but not beyond ... in short the best you can do is to breakeven. The Federal form that you would use is Form 1040 Schedule F (Profit or Loss from Farming). If you do go this route you also may have to file Form 1040 Schedule SE (Self Employment Tax) in addition to a number of other forms depending on the extent of your activities. An excellent reference so that you can find out what you are getting in to is publication 225 (Farmers Tax Guide). Unless you had a lot of sales I would strongly suggest calling the IRS and talking to an advisor. Even better, go to their web site <A HREF=""></A> and write them you question on the site. I am going to generalize here and assume that you 4-H activities are agriculturally related. If they are not them you would need to file schedule C. It could be a good experience for a young person to have to go through the tax preparation portion of running a small business but it is not a walk in the park.

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