Farm Income

[mikenbckc99]

I started a small farm in 2020. sell eggs and goats. I have expenses and sales were over $400. So i was told to file schedule F this year. Regarding expenses how do i calculate utilities? Percentage i can use? Utilities would cover water and electricity for the hens and goats. regarding home office. $5 per sq foot using simplified method. Can i do one or the other or both ? Thank you 

[ToddL99]

If your chicken coops aren't separately metered (water and electric), then use a "reasonable" method to allocate those costs between your residence, the chicken coops and any other buildings that share the same electric and water services.

Allocating by square footage may be reasonable, but whatever method you choose, use it consistently (i.e. don't  change the method from year to year).You may also look at your historical utility bills (i.e. before starting the farm) and see how much they went up. That would justify using a percentage of future bills to identify what is business-related and what is personal.

If you have a qualifying home office, you can use the simplified method or the traditional method. Where do I enter the home office deduction for my business? If using the traditional method, make sure you only use the "personal" component of your utility costs.

[mikenbckc99]

Thank you