Tax brakes for Breeding???
 

So what is allowed as deductions if you use this option for a home business?

I only ask because our accountant that we use for taxes was informing me of this. I had a home day care for 10 months and we got to take out meal expenses and other things that I had no clue I was able to do for having a home business. I had all recepts because the Director at the Child care office told me to keep them for anything that I used for keeping my friends children so I did. Anyway's She was telling me of how she breeds toy Poodles and that she was able to use her breeding program as deductions. She mentioned any food after the first litter, vet bills for any check up, shots, testing, and any advertising that you use. She said that she only had 3 litters per year from the three females that she has (one litter per dog a year) Thanks to anyone who answers for me, I have no clue that you were able to do it so it spiked my curiosity a bit, like can you do this if you only have a few litters a year? Also wondering about it because this could explain the puppy mill situation that happens depending on the tax brake one could get. It just got me really thinking and thought I would ask here.

yes, you can use your dog business as a tax write-off. I know here in Texas you would need to get a sales tax number. I know many breeders probably do not report income if they just produce a couple of litters a year. If you are raising and selling dogs as a business you can deduct vet fees, dog food, pet supplies, dog show entries (if you show), etc. You can also deduct a portion of your home utilities and a few other things.

I'm guessing that you would have to be a registered breeder with the Dept of Ag, in order to use the business as a write off. However I do not know this for a fact.

No, she said that she was just ACK registered, nothing else, and she breed Toy Poodles, she had one male and 3 females. Before her Poodles she breed birds and was able to use that as a home business and get tax deduction from that too. I wish I could of spoken to her longer on the subject because she was real knowledgeable about what expense was covered because she is an accountant too so she would know a lot on the subject.

You can take off part of the house, electricity, water, computer, phone, advertising, food, vet bills, gas, mileage on car, cleaning expenses, grooming equipment, show fees, publications, kennel equipment or anything else that applies to dogs and the money they bring in. But, you have to show a profit at least once in 5 years or its considered a hobby by the IRS. I would ask a tax person for more info on this.

Thanks for the information. See she was talking about it as a home business depending on how much you make a year from selling puppies she did not state how mush you had to make from breeding( to me at least it sounded this way) I was going to wait till tax season slows down and call her back and ask a few more questions to understand a bit more, She did say if I wanted to talk more I could call her. I wonder how much one would have to make to be able to claim this?

I'll be able to tell you more soon, because I'm trying to start up my own small business, but that's excellent about the breaks for breeders. :)

You can make a dollar profit, as long as you make a profit. But once you start claiming dogs as a business, you really need to be on your toes or you could face an audit. Keep every receipt!! It also costs alot more to have your taxes prepared with all the extra pages needed for the business.

I would think that you will have to start charging tax for your dogs too. And then report and pay taxes, nothing in business is easy. Unless you have been charging tax on your dogs, I wouldn't go near it.

I don't understand? My accountant told me that I would have a problem because I don't have a business plan or business license or anyhting and that the IRS would consider it as a hobby.

Is he wrong? If not, can I write off a female that I bought to breed and then was unable to because of a genetic problem? Can I write off her surgery to correct her problem and her spay so she can't be bred?

Should get a different accountant? I only had one litter this year, but I'm hoping to have two this year.

Maybe it differs from state to state. You dont have to have a business license here in Az. But as long as you report an income from the dogs, you can take off any expenses including the price paid for the dog to any vet expenses. You can take off the entire price paid for the dog all at one time or you can have the dog price paid "depreciated" over a period of years. H and R Block does alot of breeders.

If your business does not show a profit for 3 out of 5 years in existance than it is considered a hobby. Writing off part of your home as an expense can red flag the IRS and if you sell your home it must be taken into consideration at that time.

Per IRS rules, in order to write off a portion of your home and those related expenses..electricity, phone, etc.you must have an actual home "office" devoted entirely to your business and not used for any other purpose.

If you're considering using the expenses on your taxes, you'll also need to claim the income. Be aware you will be expected to pay your fica and medicare taxes on the income. Sales tax would not be considered an expense to write off....you didn't pay this, your buyer did and you just collected the money. Form schedule C is the tax form used for unincorporated businesses. You could considered yourself a sole proprietor. You may wish to apply for a federal tax id number.

Btw, I'm not sure you can depreciate an animal....meaning the cost of a animal purchased for breeding purposes is written off a little every year.

And as noted above....home businesses are highly scrutinized by the IRS.

Do I have to keep a separate bank account just for my Yorkies in order to use breeding as a tax deduction.

Not technically, but it will make your bookkeeping so much simpler.

My accountant seems to think that since I receive retirement and Social Security, the IRS will be more likely to look on my breeding dogs as a hobby than a business?

Ok, guys I'm a CPA so here's a little of my input. Yes, you can depreciate any dogs you purchase for breeding purposes. You can not depreciate the dogs you bred. You do not have to have a business plan, as long as you can prove your purpose in this "business" is to make a profit. Regardless of your age or income status. However, if you continually have a loss they are going to consider it a hobby. You should show a profit 3 out of 5 years. That's about it. This is treated the same as any other farmer raising cattle, sheep, etc.

Thank you!! That is very helpful!

Don't you have to charge tax and report any income (sale of puppies) ?