I wonder...
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brenndatomu
Minister of Fire
but it's not. If you are able to deduct your business expenses, how is it the opposite of profit?
I think anytime you have a expense it takes away from the profit that you could have in your pocket now and be using that now when the prices might be lower than at the end of the year. Even declaring something with business at the end of the year do not you have to group that with a lot of other expenses and wait the whole year to get the money in your pocket.. I rather have mine "Now"...clancey
Absolutely, but I still have to pay for it up front and while it's a business expense like everything else farm related, we don't get a 100% return at the end of the year. All depends on what tax bracket we fall into, so yes, I may spend a grand on diesel but in reality I only get back a percentage of it. Think last year we got back about 750 bucks in fuel usage. Under Biden's proposed tax overhaul we will get even less back
I write off everything farm related, fuel, lubricants, filters, fertilizer, seed, everything.
Keep in mind that with rising fuel costs, what I pay up front on fuel and fertilizer (because it's also market driven, I have to pay for up front. Last year I was paying 10 bucks a bag for 46% granulated Urea. This year it's 19 bucks a bag.
Don't work that way when in business. You always wait until year's end. Like a crapshoot in a way.
SidecarFlip- I find with my personal consulting business that I'm holding my breath till my taxes are done -and I've been doing it for 20 years. People don't realize the extra taxes thay you have to pay when self employed especially if it's under a certain threshhold
brenndatomu
Minister of Fire
If your crop sells for $100,000, and you had $100,000 expenses for the year...$0 profit. Fuel costs can be a major expense for many farming operations, so when fuel goes up even $1/gallon, that can easily be the difference in turning a profit, or not.
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I wish everyone had to start/own a business for at least 5 years. A new business that you start with your own funds/borrowed funds and successfully maintain for the above mentioned 5 years minimum.
That little nugget of life experience would certainly change most folks opinions of business ownership and tax law tremendously.......
That little nugget of life experience would certainly change most folks opinions of business ownership and tax law tremendously.......
brenndatomu
Minister of Fire
Exactly...I always laugh when these "financial experts" say to not pay your mortgage off because you can deduct the interest...yeah, part of it! I tell people that believe, that I will make them a better offer...instead of giving you back 25% or so, like the IRS is doing when you deduct mortgage interest, instead you pay me a dollar and I'll give you 50% back! No takers yet...
U can't deduct your Mortgage Interest unless you don't take the standard deduction. Only once in my life I was able to do that. You can’t deduct home mortgage interest unless the following conditions are met. You file Form 1040 or 1040-SR and itemize deductions on Schedule A (Form 1040).
brenndatomu
Minister of Fire
I know things have changed the last couple years, but prior to that I was always able to deduct it...not sure how it all pans out now...that's what I pay my tax guy for...
Yea to deduct it you need to file a long form and that costs more money plus you need to have a certain amount of interest that you are paying in order to deduct it--rip off's--I say work on paying your homes off..clancey
I was able to deduct my home mortgage for 20 years by itemizing. Once the kids turned 18 that all changed. Prior to that with them as deductions, medical, work deductions for tools, required safety clothing, ppe, travel, food, lodging, required licensing and continued education, it all added up.
One big mistake people do when deducting travel, food and lodging is itemizing it all. If you can prove you worked away from home at a certain place for under a year, most of the time you are better off taking the GSA per diem rates than to itemize them all.
Example: working in Rockford, Il. Allowed lodging was around $80.00 per day, $560 per week. I payed $350.00 per week for an extended stay room with full kitchen. I took the allowed per diem rate of $560. Then add in that the food allowance was around $75.00 per day, $525.00 per week. I had the full kitchen in my room. For $75.00, or one days allowance I could fill my fridge with decent food and was good for a week and took the allowed per diem instead of itemizing everything.
Every city/area is different and sometimes you are better off itemizing, but I found that around 90% of the time that wasn't the case. And the time it saves with not having to save every little receipt for everything you spend is worth the time saved.
The more common, and better, argument for not paying off your mortgage is that you can do better with that money invested. Mortgage rates have been under 3% for years, all time average stock market returns are triple that.
Another argument is that due to inflation, your mortgage payment gets cheaper every year.
Myself, I don’t like owing people anything and having been through a couple of recessions am happy to recognize that some things are more important than maximum earnings.
Another argument is that due to inflation, your mortgage payment gets cheaper every year.
Myself, I don’t like owing people anything and having been through a couple of recessions am happy to recognize that some things are more important than maximum earnings.
brenndatomu
Minister of Fire
Yes!
Not owing anyone anything gives a special kind of sleep!
My antique train of thought is this. Any debt is BAD debt. Financial wizards/advisors be damned I say
To each there own but thinking/believing that carrying some debt is healthy is simply a reflection of our current discombobulated state of the union. Our forefathers are gnashing there teeth from beyond.........
To each there own but thinking/believing that carrying some debt is healthy is simply a reflection of our current discombobulated state of the union. Our forefathers are gnashing there teeth from beyond.........
tlc1976
Minister of Fire
The sooner I can get rid of a mortgage payment, the better. Then what I was paying could go towards building savings fast. To pay off my mortgage in half the time requires less than double my payment. So in the end I’m ahead. Also if the house is paid off, I could benefit greatly from a reverse mortgage if I chose to do so. If I just paid the minimum, I’d still be making mortgage payments in my 70s. No thanks.
Don’t do it that way. Save up a house payoff fund, invested earning money, until it’s large enough to pay the mortgage off in one shot. There are so many reasons that it’s better but again, having lived through recessions, you can make payments from the payoff fund and it’s actually earning you lots of money as it grows.
After mortgage payoff your cash flow situation improves.
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