Horses are expensive, but can be a great tax write-off.
Horses can be a wonderful tax write-off. The amount of money you can spend feeding, housing, and caring for a horses, or horses, can be huge, and depending on the situation, can be counted as a "write-off" on your taxes. But it's important to know what the IRS considers deductible expenses. The government will see if your horses are a "hobby" or a "business."
Instructions
1. Start by researching the IRS website and reading pamphlets about small business. You must familiarize yourself with the rules associated with owning and operating a small business or sole proprietorship. It is also wise to contact a CPA and schedule a consult about running a small business and the tax forms you will be expected to fill out.
2. Claim your horses as a business-as long as you follow certain rules. You must keep all your accounting for your horse business separate from your personal account. Every expense must be accompanied by documentation and a receipt, and any mileage used for business must be noted in a log book. In addition, you must turn a profit within seven years to establish yourself as a viable business to the IRS.
3. Consider becoming an LLC, or limited liability company. LLC's never have to show a profit and limit personal liability, protecting personal assets in the case of legal issues. As an LLC, all business expenses relating to the horses can be written off.
4. Consult with a certified personal accountant who specializes in Equine Tax Law. They are aware of all the rules and regulations for claiming horses as a tax deduction. Check with your local Business Bureau for a listing of CPA's and their contact information. You can also contact local horse farms for a referral and see who they use.
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