Self Employment Income - Allowable Farm Expenses

Car and Truck Expenses

• Allow the business portion of expenses for:
  • Gasoline
  • Oil
  • Repairs
  • Insurance
  • Parking Fees
  • Tires
  • Rental Fees
  • Garage Rent
  • License Plates
  • Allow a deduction for vehicle registration, prorated for 12 months.

Chemicals

• Chemicals

Conservation Expenses

1. Deductible soil and water conservation expenses are those that are paid to conserve soil and water or to prevent erosion of land used for farming AND
2. This deduction may not exceed 25% of the gross income from farming

Custom Hire (Machine Work)

• Amounts paid for custom hire or machine work (the machine operator furnished the equipment)

Depreciation

• Depreciation

Employee Program Benefits

• Contributions made to employee benefit programs that are not an incidental part of a pension or profit-sharing plan

Feed Purchases

1. Expenses for feed that was consumed by the livestock in the current year, including prepaid farm supplies AND
2. Deduct the expense for prepaid farm supplies that does not exceed 50% of the other deductible farm expenses in the year of payment

Fertilizers and lime

• Cost of fertilizer, lime, and other materials applied to farmland to enrich neutralize or condition it

Freight and Trucking

• Costs of freight and trucking

Gasoline, fuel and oil

• Cost of gasoline, fuel and oil used for farming

Insurance Premiums

• Premiums paid for farm business insurance

Interest

1. Interest paid to banks or other financial institutions for a mortgage on farmland or other obligations incurred in the farm business AND
2. If the proceeds of a loan are used for more than one purpose (for example, personal and business), allocate the interest on that loan to each use AND
3. Only allow the portion of the interest payment that is the farm expense.

Labor Hired

• Amounts paid for farm labor

Pension and Profit-Sharing Plans

• Contributions made to employee pension, profit-sharing, or annuity plans for employees of the farm.

Rent or Lease Payments

• Business portion of the rental cost for rented or leased vehicles, machinery, or equipment.

Repairs and Maintenance

• Amounts paid for repairs and maintenance of farm buildings, machinery, and equipment.

Seeds and Plants Purchased

• Costs of seeds and plants purchased for further development and cultivation before sale

Storage and warehousing

• Costs for storage and warehousing

Supplies purchased

• Costs of supplies and materials used in the farming.

Taxes

• Taxes paid by the Farm:
  • Real estate and personal property taxes on the farm business assets
  • Social Security and Medicare taxes paid to match what was required to be withheld from farm employees wages
  • Federal unemployment taxes
  • Federal highway use taxes.

Utilities

• Amounts paid for gas, electricity, water, etc., for business use on the farm.

Veterinary, Breeding, and Medicine

• Veterinary, breeding and medicine costs

Advertising and Promotional Fees

• Amounts paid for advertising and promotional fees

Office Expenses

• Expenses paid as operating costs of an office

Qualified clean-fuel vehicle property

• Cost of qualified clean-fuel vehicle property

Legal and Professional services

• Legal and professional fees that are ordinary and necessary expenses directly related to operating the farm