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New Member
posted Mar 22, 2024 3:29:15 PM

Can a handmade craft business claim farm expenses?

Two years ago I started a small business making hand spun yarn from alpaca fiber. I sell my products online via my own website as well as in person sales. I have a business license in my state with a DBA tied to my name and SSN. I only had basic expenses that I claimed in 2022 on a Sch C like office supplies, postage, and shipping materials. I don't really have any other costs of doing business because the fiber that I use to make my yarn comes from my own herd of animals that I already own. Can I claim any expenses related to the animals as business expenses (for example feed, medical, and shearing)?

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Expert Alumni
Mar 23, 2024 6:55:48 AM

In your case, it seems like you have both farm and non-farm businesses. A farm business includes all activities related to the production of crops and livestock.  Non-farm business would be activities related to crops and livestock like processing, and packaging.  According to farmers.gov, business could be split between farm and non-farm.  An example given is a vineyard and winery:

  • The production of grapes is farm income and should be reported on Schedule F.
  • The sale of wine, juice, or jelly is considered non-farm income and should be reported on Schedule C. 

You should include the income and expenses of raising your herd on Schedule F, and the income and expenses for the yarn on Schedule C.  

 

An Introduction to Ag Taxes: What New Farmers Should Know

 

Feel free to reach us again if you have additional questions.