Each of these benefits has somewhat different qualifying factors in terms of income thresholds and sources. But the starting point for nearly all of these is to file an IRS Schedule F (Statement of Profit or Loss from Farming). In the eyes of Big Brother, this officially makes you a farmer. The IRS, however, doesn’t like to give tax breaks to hobbyists, so if you’re going to receive tax deductions from your farming activities, it would be a good idea to start with some sort of documentation that shows an “intent to make a profit”. Everyone knows that the even the best-laid plans of mice, men and especially farmers can go awry (animals died, crops failed, markets tanked, equipment broke, etc.) so receiving tax benefits from a farming activity that may never turn a dime of profit is acceptable as long as the planning, assumptions and management reasonably strived to do otherwise.
The goal of every farmer should be to make a profit. However, for the purpose of income taxes and the Schedule F, only monetary benefits can be reported.
For profit in the sense of benefits exceeding costs to determine whether a farming activity is worth continuing, the measurements can and should take
into account the other reasons previously mentioned. Even if the farmer never shows a profit on a tax return, it doesn’t mean that the farmer isn’t generating considerable positive contributions for both his or her family, as well as the local community and economy. The economic impact of small farms may seem unimportant on an individual basis, but collectively the impact can be very significant. That’s why CCE works with “farms” of all shapes, sizes and types to help both new and established operations grow and succeed.
On Saturday March 12th and 19th, Schuyler CCE and other members of the SCNY Agricultural Team will host one day workshops on “Getting Started with Farming”. See the events section for details. Another great starting point is the Cornell Small Farms Program: http://smallfarms.cornell.edu
Choosing a Farm Enterprise
Cornell Small Farms Program