# Firewood and Taxes



## jayhawkinmi (Jan 5, 2011)

Just curious how the firewood sellers keep track of their sales for tax purposes? Are you able to deduct fuel costs, equipment costs, and other expenses? Are you able to depreciate the value of your wood haulers?

I'm sure every state is different, but just something I was curious about.


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## ropensaddle (Jan 5, 2011)

jayhawkinmi said:


> Just curious how the firewood sellers keep track of their sales for tax purposes? Are you able to deduct fuel costs, equipment costs, and other expenses? Are you able to depreciate the value of your wood haulers?
> 
> I'm sure every state is different, but just something I was curious about.


 Yes you can save receipts equipment credits for depreciation or out right, cpa can help. Many get cash! It depends if your selling a boat load get a cpa to set you up it will save you in the long run.


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## Wood Doctor (Jan 5, 2011)

*Big Business or Friendship and/or Charity?*

Hmmm... I wonder how many firewood sellers accept cash only from customers, charge the customer no sales tax, and absorb whatever expenses and effort that it takes to keep the customer's house warm in the winter so that nobody freezes to death?


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## jayhawkinmi (Jan 5, 2011)

WD--that kind of gets to the root of my question--except for the freezing to death part---which if truly a concern then one could always give the wood away and there would not be income attached for providing wood for a family/person in need. A seller could also discount the wood sale for a needy family, but then need to claim that discounted sale as income. 

When a person sells wood for cash, check, or otherwise that is still income that should be reported, regardless of the quantity. Do most wood sellers keep a running total or pass out receipts at the point of sale?


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## flotek (Jan 5, 2011)

jayhawkinmi said:


> When a person sells wood for cash, check, or otherwise that is still income that should be reported, regardless of the quantity. Do most wood sellers keep a running total or pass out receipts at the point of sale?


 
you must be registered as a democrat :help: lol well i dont sell firewood and never would (no pun intended) but I would seriously doubt there are too many firewood sellers who do the whole tax tally deduction route unless they were a huge operation,if you did add in sales tax on your supply then nobody would be willing to pay extra for it when they can simply get tax free wood right down the street .its bad enough theres really no money in the business as it is for your labor and time but if you gotta cut washington in on any profit you made you might as close up shop .might as well give your money away


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## TMFARM 2009 (Jan 5, 2011)

i dont pay taxes on it!!! I have my business set up as a church.... :hmm3grin2orange::hmm3grin2orange:
No seriously are you an IRS agent?:help::bang::bang:
i suppose you will tell everyone its stealing if they dont pay up....

we use a CPA for that crap....yes receipts are handed out on every sale even the people who have been laid off for over a year and have to make payments......its called received on account.&expense and such.... if you are going to run a business,take a class first..:hmm3grin2orange::hmm3grin2orange:


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## jayhawkinmi (Jan 5, 2011)

Not an IRS agent, not a Democrat (I'm an Independent) and I don't sell wood--just cut for our own use and provide some for free when people have needed it.

I was just curious how people selling wood keep track of the tax issues--both on the sales tax side and the income tax side, and wanted to know what the actual realized benefits could be in terms of equipment depreciation and available deductions.


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## TMFARM 2009 (Jan 5, 2011)

just having fun with ya....most of ours is done by CPA...we try not to have too many payouts..i lost the farming business for giving too many price breaks.just about lost everything for cancelled contracts and such.out of the twenty three customers i had only two stepped up and helped out when it all ended...but they all had there hands out when they had issues... i wont lose another business for that again...times are tough for everyone right now ...
my wife has been laid off for two years. no unemployment either,i know how bad it can get for people...just dont let them take advantage of your hard work,especially if they are on the Obama plan..let them come out and split for it or help cut it or handle it..give them the satisfaction of a good days work..LOL:angrysoapbox:oke:


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## ropensaddle (Jan 5, 2011)

TMFARM 2009 said:


> JUST HAVING FUN WITH YA.... MOST OF OURS IS DONE BY CPA...WE TRY NOT TO HAVE TOO MANY PAYOUTS. WE LOST THE FARMING BUSINESS FOR GIVING TOO MANY BREAKS PRICE WISE JUST ABOUT LOST EVERYTHING FOR CANCELLED CONTRACTS AND SUCH. OUT OF THE TWENTY THREE CUSTOMERS I HAD FARMING, ONLY TWO HELPED OUT WHEN IT ALL ENDED... BUT ALL HAD HANDS OUT WHEN THEY WHERE HAVING ISSUES... I WONT LOSE ANOTHER BUSINESS FOR THAT AGAIN. TIMES ARE TOUGH FOR EVERYONE RIGHT NOW... MY WIFE HAS BEEN LAID OFF FOR TWO YEARS. NO UNEMPLOYMENT EITHER,I KNOW HOW BAD IT CAN GET FOR PEOPLE....JUST DONT LET THEM TAKE ADVANTAGE OF YOUR HARD WORK, ESPECIALLY IF THERE ON THE OBAMA PLAN..LET THEM COME OUT AND SPLIT FOR IT OR HELP CUT IT UP AND HANDLE IT....GIVE THEM THE SATISFACTION OF A GOOD DAYS WORK....LOL:angrysoapbox:oke:


 
I see your pretty new here and probably new to forums, turn your cap lock off, it is called screaming and is an infraction! I don't think you want to get banned and prolly did not know, I too did it early on!


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## indiansprings (Jan 6, 2011)

In Mo. we are legally required to give a receipt, stating quanity in fractions of a cord, any stacking or delivery charge, the customers name, date, total amount charged/ date and name of our business. We just have the cpa that does the farm account handle it. At the price we have to sell at, and after all the deductions for labor, fuel, supplies/equipment (saws/ chain, bar oil, hydraulic fluid, delivery truck depreciation, etc etc, I've never paid a cent in taxes usually right at break even and have even got some back. We do give some really hard up people with families some wood each year, ones that are out busting their azz trying to support their kids, no drunken bums or dopehead's or people that are just plain lazy, usually the preacher will point out the folks who need a break. We delivered some free wood on xmas eve. I like it when no one is home, I don't want any recognition, just soon it be a surprise from the wood fairy.
We sell enough that I'm afraid if I didn't report income someone would turn us in, it's just safer to be legal as possible, I might tuck a little cash away every once in awhile to fund CAD,lol.


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## jayhawkinmi (Jan 6, 2011)

indiansprings--thanks for the information--that was exactly what I was curious about. It looks like there are some significant advantages to keeping good records and doing things on the up and up, i.e. deductions on fuel/equipment costs and depreciation on your truck.

cheers


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## 1harlowr (Jan 6, 2011)

If you are asking if the net comes out higher by collecting sales tax, paying income tax, and taking depriciation deductions on equipment the real answer is no. Not even close. 
No sales tax, no income tax, and no deductions will net you a higher dollar amount. Right or wrong you decide. 
If it is a side job selling 20-25 cords a year, no one will probably ever know. If it is part of your actual business you'd better think long and hard about tax consequences.


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## johncinco (Jan 6, 2011)

Firewood sales? What firewood sales?  But if you are running a "business" doing it, you had better be ready to claim and pay on the sales. I don't think the guy on the side keeps track or pays much of it. 
I can guarantee its going to get stricter. The US is BROKE. We are about to reach our debt limit of $14.4 TRILLION . The IRS hired an additional 35,000 workers and auditors last year. Can you see where this is headed? Ebay is required to report anyone with sales of $999 in a year now. All the people working the "gray" area are headed for date with a auditor. They are now searching craigslist and online sites to determine if you are hiding income and not reporting it. Eventually your going to need a permit to have a garage sale, and your going to pay tax on your old ice skates and VHS tapes that you sold, which you paid tax on when you bought. 

Velcome to Amerika. Deposit all belongings and assets in the receptacles, move along to the end of the line, you will receive your share at the end.


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## beerman6 (Jan 6, 2011)

This thread comes at a good time.

There is a guy on my way to and from work that sells firewood.He has always had a sign up in his front yard showing the price and how many (face)cords he had left.

This year there was no cord count until yesterday...


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## mooseracing (Jan 6, 2011)

johncinco said:


> The US is BROKE. We are about to reach our debt limit of $14.4 TRILLION . The IRS hired an additional 35,000 workers and auditors last year.


 
Imagine if they made all the people in the whitehouse, sentate, and house of reps pay their back taxes. I bet it could make a nice dent.


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## Highbeam (Jan 6, 2011)

All cash, no tax. Only sell a few cords though.


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## amr40509 (Jan 6, 2011)

I'm not a firewood seller, but what are your thoughts on this:

I expect businesses that plan to advertise their services as a business, and plan to stay in business for awhile, to carry proper insurance and properly file/pay taxes. 

That said, when I'm working with a small business, I often ask if they have a cash price. I do this with the realization that if I take the cash price, it is paid in cash (no checks) and there is no paper-trail. If they choose to report it or not, that is for them to decide - I don't expect any receipt in that case either.


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## Wood Doctor (Jan 6, 2011)

I doubt seriously that Uncle Sam is broke because a few firewood suppliers fail to collect sales tax from their customers. Sales tax is a state tax and Uncle Sam collects nothing from taxes on local sales.

Uncle Sam figured out his own way to run up another $trillion in debt during this past year alone. Firewood suppliers trying to keep their customers warm in winter had nothing to do with it.


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## angelo c (Jan 6, 2011)

johncinco said:


> Firewood sales? What firewood sales?  But if you are running a "business" doing it, you had better be ready to claim and pay on the sales. I don't think the guy on the side keeps track or pays much of it.
> I can guarantee its going to get stricter. The US is BROKE. We are about to reach our debt limit of $14.4 TRILLION .


 
John, its misinformation like this that drives me nuts...it's 14.3 trillion dollars not 14.4 ....

If you make one dollar every second, you will have a million dollars in twelve days. You will be a billionaire in 32 years, but it will take you more than 31,000 years to make a trillion dollars x that by 14.3 and you might have a grasp on what we owe. 

Sorry but taxes make me weary. Until you have been extorted by the IRS you do not know the full power of a taxing authority. Remember in any tax trial you are guilty as charged until you prove otherwise. You have the burdon of proof. Ask me how I know some day over a few cases of beer. 

Nothing I ever confronted in 25 years of running a pizza/restaurant in NJ ever came close to the IRS's tactics. 

Hope no one ever finds out.


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## BPS. LLC (Jan 6, 2011)

The people that I may know that sell firewood keep it as a cash in, cash out business. But I'm not sure I know anybody that sells firewood. 

Unless you're on a large scale, you're not making much money anyway.


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## turnkey4099 (Jan 7, 2011)

BPS said:


> The people that I may know that sell firewood keep it as a cash in, cash out business. But I'm not sure I know anybody that sells firewood.
> 
> Unless you're on a large scale, you're not making much money anyway.


 
Taxes are one thing that has always worried me. I sold a few cords a year, cash only, paid no tax. Drawback is that my place is right on the main highway and I always have huge stacks (40+ cords Black Locust currently). I shuddered to think of the problems I would have if the tax man stopped by. Just put up a "This wood NOT for sale" sign on the fence and have told all my old customers that I won't sell any more.

Now, I know that at best what I sold only broke even at best, but try to convince the "man" with no records.

Harry K


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## Cambium (Jan 7, 2011)

Use the Casino approach. Does everyone report casino winnings or losses? And seriously, after figuring out your time and expenses the firewood business really isnt a major profit. I used to think different a short time ago. lol


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## D&B Mack (Jan 7, 2011)

1. Most states, including my lovely state of PA, have firewood sales (as used for home heating) as sales tax exempt.

2. I run all my numbers clean through the books. Get a good CPA and it will make it worthwhile to record your income and expenses, there isn't THAT much profit in firewood sales.


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## johncinco (Jan 7, 2011)

I am sure they cold make it a lot more complicated than just a sales tax issue. There is also an income tax issue. You are selling product, so a sales tax is required. You are also collecting income for your time, work, delivery, etc. 
Sales price - purchase price - labor costs - over head = profits 

Just adjust accordingly as needed.  I am sure you could add in 100 more items, but if you place labor costs at anything, and keep it, well ya got income. Somebody's got to pay for that Hawaiian vacation.


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## STLfirewood (Jan 7, 2011)

I am to the point where I am going to have to start collecting sales tax. I already claim my firewood sales as income. So I do pay taxes on my firewood sales. Here is my question. Missouri is a no tax on labor. Meaning you don't pay tax on any labor. If you get your car worked on at a shop you pay tax on the parts but not the labor. I wonder how much of a firewood sale can be consider labor and how much can be considered product.

Scott


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## Dalmatian90 (Jan 7, 2011)

Stacking at the customer location since that's not normal and customary when someone buys a cord of wood delivered. Provided you itemize those separately -- wood, delivery charge, stacking labor.

Labor to prepare the product for retail sale counts as part of the sale price.


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## Wood Doctor (Jan 7, 2011)

STLfirewood said:


> I am to the point where I am going to have to start collecting sales tax. I already claim my firewood sales as income. So I do pay taxes on my firewood sales. Here is my question. Missouri is a no tax on labor. Meaning you don't pay tax on any labor. If you get your car worked on at a shop you pay tax on the parts but not the labor. I wonder how much of a firewood sale can be consider labor and how much can be considered product.
> 
> Scott


If you bought the firewood, already processed, and then resold it at a profit, I judge that in your state, you would have to pay tax on it and charge your customers tax for it. However, I imagine that you collected the firewood and you used your time and your equipment. You have already paid taxes on the equipment, fuel, oil, etc.

So, your product is very labor intensive, and thus I doubt that any taxes should be charged to your customers that you, in turn, would have to pay back to the state of Missouri.


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## Extreme Heat (Jan 7, 2011)

*Errr Taxes*

We pay our fare share to the Grand ole State of Caulifonia! But the fact that i have to pay road taxes at the pump for the 1000 gallons of gas that i go thru on our portable spliters and chainsaw's that of coarse will never touch the road pisses me off!


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## STLfirewood (Jan 7, 2011)

Extreme Heat said:


> We pay our fare share to the Grand ole State of Caulifonia! But the fact that i have to pay road taxes at the pump for the 1000 gallons of gas that i go thru on our portable spliters and chainsaw's that of coarse will never touch the road pisses me off!


 
In Missouri you can keep track of the fuel you use off road and fill out the paper for a tax rebate for the road taxes.


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## Extreme Heat (Jan 8, 2011)

STLfirewood said:


> In Missouri you can keep track of the fuel you use off road and fill out the paper for a tax rebate for the road taxes.


 
I Agree, but...they offer off road Diesel with less effort on the paperwork.


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## STLfirewood (Jan 8, 2011)

Extreme Heat said:


> I Agree, but...they offer off road Diesel with less effort on the paperwork.


 
Here the stations that sell off road diesel only discount it $.10 a gallon. You might find one that does $.15. I don't use enough to worry abut it. 

Scott


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## firewood guy (Jan 9, 2011)

Extreme Heat said:


> We pay our fare share to the Grand ole State of Caulifonia! But the fact that i have to pay road taxes at the pump for the 1000 gallons of gas that i go thru on our portable spliters and chainsaw's that of coarse will never touch the road pisses me off!


 
I feel the pain too from cali.. Just got 300 gals # 2 red diesel delivered yesterday, 3.06/gal w the farmer/ ag exemption so only paid the 2.75% tax rate. But gas? Can't even deduct the sales tax on the SBOE return! And why is propane, nat gas sales tax exempt, but "fuel wood" is fully taxable as it is classified in cali as a "seasonal" sale just like a cut Christmas tree!? Looking for an exit stratigy from the land of fruits and nuts...Just better be a state where I can ride the the quads and not have to get a smog check on my backhoe!! For all you non-calis, we now have to get emissions testing on our diesel trucks, and the smog nazis want us to replace all of our non-tier compliant off highway equip.. enough already.:bang:


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## Extreme Heat (Jan 9, 2011)

firewood guy said:


> I feel the pain too from cali.. Just got 300 gals # 2 red diesel delivered yesterday, 3.06/gal w the farmer/ ag exemption so only paid the 2.75% tax rate. But gas? Can't even deduct the sales tax on the SBOE return! And why is propane, nat gas sales tax exempt, but "fuel wood" is fully taxable as it is classified in cali as a "seasonal" sale just like a cut Christmas tree!? Looking for an exit stratigy from the land of fruits and nuts...Just better be a state where I can ride the the quads and not have to get a smog check on my backhoe!! For all you non-calis, we now have to get emissions testing on our diesel trucks, and the smog nazis want us to replace all of our non-tier compliant off highway equip.. enough already.:bang:



Amen FWG I have Property in Idaho and Nevada...But i'm bound by contracts with our wood so i'm stuck here for a little while longer, just gunna have to ride the wave out and see were it crashes...They say it's the price we pay for sun shine!


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## atvguns (Jan 9, 2011)

I just sell all my wood under the wifes name that way if they lock her up for tax evasion no biggy:hmm3grin2orange:


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## olyman (Jan 9, 2011)

mooseracing said:


> Imagine if they made all the people in the whitehouse, sentate, and house of reps pay their back taxes. I bet it could make a nice dent.


 
huge dent--but the perverters of america--want it that way--and they are the head of the class


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## olyman (Jan 9, 2011)

johncinco said:


> I am sure they cold make it a lot more complicated than just a sales tax issue. There is also an income tax issue. You are selling product, so a sales tax is required. You are also collecting income for your time, work, delivery, etc.
> Sales price - purchase price - labor costs - over head = profits
> 
> Just adjust accordingly as needed.  I am sure you could add in 100 more items, but if you place labor costs at anything, and keep it, well ya got income. Somebody's got to pay for that Hawaiian vacation.


 
and dubai!!! etc,,,,,,


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## Haywire Haywood (Jan 9, 2011)

I read someplace that if you don't have enough sales, the IRS can toss out your deductions and say that what you are doing is a hobby, not a business. I bet they'll still want you to pay income and sales taxes though.

Ian


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## Dalmatian90 (Jan 9, 2011)

> I read someplace that if you don't have enough sales, the IRS can toss out your deductions and say that what you are doing is a hobby, not a business



They look for making a profit 3 out of 5 years.

If you don't have five years when you're audited, then they look to see if you're running it like a business...which is a more subjective test which the squeeze and listen to the quack, and try to decide if that's a business duck quacking or a hobby duck quacking.


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## Extreme Heat (Jan 9, 2011)

atvguns said:


> I just sell all my wood under the wifes name that way if they lock her up for tax evasion no biggy:hmm3grin2orange:


 The only thing about this is i wouldn't be able to fill out her Deer/Elk tag or claim all the fish that she caught....


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## woodhounder (Jan 10, 2011)

STLfirewood said:


> I wonder how much of a firewood sale can be consider labor and how much can be considered product.
> 
> Scott


 
I would say most of it, if not all of it is labor. What is it worth without the labor? Nothing.


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## doneaton87 (Jan 10, 2011)

It doesn't really matter how much labor you're putting in a cord of wood. You're a manufacturer of a product that you're selling and the state wants their share.
As a business you should have a state tax id number. If you don't and get caught, the state can go back as far as they feel like checking for income in your bank accounts. There is no 7 year limit like it is on other tax laws.
Basically if you charge say $300.00 for a cord of wood, you'll collect whatever the tax rate is where you sell that wood and send it to the state. (Remember different municipalities have different rates and they all want a share of that from the state) From your gross profit later on you can deduct your labor, fuel or equipment cost.
This is where good record keeping comes in and this is what usually separates the hobbyist from the pros.


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## 1harlowr (Jan 11, 2011)

:agree2:


doneaton87 said:


> It doesn't really matter how much labor you're putting in a cord of wood. You're a manufacturer of a product that you're selling and the state wants their share.
> As a business you should have a state tax id number. If you don't and get caught, the state can go back as far as they feel like checking for income in your bank accounts. There is no 7 year limit like it is on other tax laws.
> Basically if you charge say $300.00 for a cord of wood, you'll collect whatever the tax rate is where you sell that wood and send it to the state. (Remember different municipalities have different rates and they all want a share of that from the state) From your gross profit later on you can deduct your labor, fuel or equipment cost.
> This is where good record keeping comes in and this is what usually separates the hobbyist from the pros.


 
State sales tax, county sales tax (county where the sale), and any other municipalities that could be involved. In Ohio we have another tax to the state (CAT tax $150 yr) for the honor of being in business. What about any withholding taxes for anyone that helps you? 

Your deductions for equipment wouldn't be worth it if you pay all the taxes that are required unless you were really turning out the sales. 

Also next time you make a delivery, tell the customer that is $300 plus $22.50 for taxes.


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## John R (Jan 11, 2011)

jayhawkinmi said:


> When a person sells wood for cash, check, or otherwise that is still income that should be reported, regardless of the quantity. Do most wood sellers keep a running total or pass out receipts at the point of sale?


 


flotek said:


> you must be registered as a democrat


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## firewood guy (Jan 12, 2011)

Extreme Heat said:


> Amen FWG I have Property in Idaho and Nevada...But i'm bound by contracts with our wood so i'm stuck here for a little while longer, just gunna have to ride the wave out and see were it crashes...They say it's the price we pay for sun shine!


 
And now Moonbeam wants to continue the '08 "temporary" tax increases to the tune of nine (9) billion a year for another 5 years.. 45 billion in total, without addressing the bloated state employees and their unfunded retirements, or free health care for illegals, or welfare moms on crack.. there will be a crash alright!! Just hope places like Texas will still accept ex-Califiornians LOL


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## firewood guy (Jan 12, 2011)

mooseracing said:


> Imagine if they made all the people in the whitehouse, sentate, and house of reps pay their back taxes. I bet it could make a nice dent.


 
At least they took out that ridiculous requirment that all us small-biz owners had to 1099 everyone that we purchased more than $600.00 / year from. Wow I'd not only have to 1099 the local gas station, but also the liquor store!!


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## firewood guy (Jan 12, 2011)

doneaton87 said:


> It doesn't really matter how much labor you're putting in a cord of wood. You're a manufacturer of a product that you're selling and the state wants their share.
> As a business you should have a state tax id number. If you don't and get caught, the state can go back as far as they feel like checking for income in your bank accounts. There is no 7 year limit like it is on other tax laws.
> Basically if you charge say $300.00 for a cord of wood, you'll collect whatever the tax rate is where you sell that wood and send it to the state. (Remember different municipalities have different rates and they all want a share of that from the state) From your gross profit later on you can deduct your labor, fuel or equipment cost.
> This is where good record keeping comes in and this is what usually separates the hobbyist from the pros.


 
True that and beware of the the long-arm of the tax man. there is no statute of limitations on tax fraud. They can go back as far as they want. Scarry prospect. Get yourself a GREAT CPA, not a flunk. They should at least know all the loopholes that members of congress get. And there are tons. Don't be afraid to pay your tax guy $400+ for your return.. they will save you many times that amount .. no BS, I know from experience. That way, you deduct sooooo many things youll be surprised and keep many more bucks in your wallet.


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## tex (Jan 12, 2011)

This thread has me depressed. From selling wood to fixxing a co-workers car, you have to be a criminal on paper to make an extra buck.


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