You don't need to be a farmer to benefit from the depreciation of your tractor, truck, buildings, etc..., which is where the real tax benefits are. Being a farmer provides other benefits on top of tax deductions (such as being able to take your tax deduction at time of purchase).
All you need to do is set up a business (non-farming is OK) which requires all of the investments mentioned above (along with anything else you want to depreciate) to operate.
Your business needs to show some revenue (I think the minimum is $2400) to the IRS within a two year period, but there are ways around this as well (tree farming seems to be one way), which is why hiring an tax accountant with relevant small business experience is a really good idea. Business tax laws vary from state to state as well; another good reason to hire an accountant. Note that you can write off the cost of the accountant as well.
If you have a good income from your regular job, and set up a *real* small business on the side, the depreciation deductions from the business will translate into significant income tax savings from your regular job, which can be further spent on business improvements, propogating your depreciation write-off for future years.
If you are running a legitimate business, then you don't ever have to worry when the audit comes, because you'll easily be able to back up any claims you've made, with your accountant at your side, when the audit arrives. The audit *will* come, so you're best to expect and prepare for it rather than try to avoid it.
My wife and I are a case in point. We run a horse boarding business and a hot-rod business on top of our regular jobs. So far we have spent well over $150K of our regular income and savings on starting up the two business in the past year, and we've only shown a very small amount of revenue (around $10K) since we started.
However, our investment in equipment and business-related costs gets depreciated, which reduces our income tax significantly, and we expect both our businesses to grow over the years, to the point where both of us can retire from our 'day job'.
We have put together a very conservative business plan and don't expect to see any net profit for around six years. Revenue, however, is certainly climbing, and is expected to grow significantly as our place gets completed, allowing to transition into a very comfortable self-sufficient and self-owned operation as we reach an early retirement age.
The point is not to get out of paying taxes; you're going to have to pay at some point no matter what you do. The point is really to create a better life for yourself and to benefit society in the process. The government seems quite willing to help if you take the time to understand and play by their rules.
All you need to do is set up a business (non-farming is OK) which requires all of the investments mentioned above (along with anything else you want to depreciate) to operate.
Your business needs to show some revenue (I think the minimum is $2400) to the IRS within a two year period, but there are ways around this as well (tree farming seems to be one way), which is why hiring an tax accountant with relevant small business experience is a really good idea. Business tax laws vary from state to state as well; another good reason to hire an accountant. Note that you can write off the cost of the accountant as well.
If you have a good income from your regular job, and set up a *real* small business on the side, the depreciation deductions from the business will translate into significant income tax savings from your regular job, which can be further spent on business improvements, propogating your depreciation write-off for future years.
If you are running a legitimate business, then you don't ever have to worry when the audit comes, because you'll easily be able to back up any claims you've made, with your accountant at your side, when the audit arrives. The audit *will* come, so you're best to expect and prepare for it rather than try to avoid it.
My wife and I are a case in point. We run a horse boarding business and a hot-rod business on top of our regular jobs. So far we have spent well over $150K of our regular income and savings on starting up the two business in the past year, and we've only shown a very small amount of revenue (around $10K) since we started.
However, our investment in equipment and business-related costs gets depreciated, which reduces our income tax significantly, and we expect both our businesses to grow over the years, to the point where both of us can retire from our 'day job'.
We have put together a very conservative business plan and don't expect to see any net profit for around six years. Revenue, however, is certainly climbing, and is expected to grow significantly as our place gets completed, allowing to transition into a very comfortable self-sufficient and self-owned operation as we reach an early retirement age.
The point is not to get out of paying taxes; you're going to have to pay at some point no matter what you do. The point is really to create a better life for yourself and to benefit society in the process. The government seems quite willing to help if you take the time to understand and play by their rules.
