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Need help on tax write-offs for donating land use with fruit trees to school agriculture program
Hey tax people! I'm trying to figure out the best way to handle this tax situation my wife and I have. We own a small orchard with about 120 fruit and nut trees that's becoming a bit much for us to maintain properly. We've been thinking about letting our local high school's agriculture program use the land for their students. They could maintain the trees, harvest everything, and sell the produce to raise money for their department. Seems like a win-win since the property gets maintained, the school gets funding, and hopefully we get some tax benefits. Here's the thing - we don't want to permanently give away the property, just let them use it for as long as we're able to offer it. I'm wondering how we could structure this as a tax write-off each year? Is this something that can be deducted annually? Do we need something formal in writing, or would a verbal agreement work? And how would we value this for tax purposes? I know there are rules about donating use versus donating the property outright. Any advice would be super appreciated! Thanks!
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How do I start filing taxes after not filing for multiple years?
I've been dealing with some serious addiction issues for about 6 years. While I managed to keep my job and pay rent (though usually late), I completely neglected filing my taxes during this time. I always had the maximum amount withheld from my paycheck on my W-2, so I'm hoping that helps my situation. This tax situation has become a constant source of anxiety for me. I'm honestly embarrassed I let it go this long, and that's partly why I've been afraid to ask for help. The whole thing feels completely overwhelming at this point. I'm finally in a better place and ready to tackle this problem, but I have no idea where to start. Where should I go for help? What's the first step I should take? How much will it cost to have someone sort through multiple years of unfiled taxes? Am I facing serious penalties or legal trouble? What's confusing is that I've never heard anything from the IRS. No notices, no wage garnishments, nothing. I don't know if that's good or bad. Any advice would be really appreciated - I'm just looking for a starting point without judgment. I know I messed up and I want to fix this.
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One thing nobody mentioned yet - make sure you're addressing both federal AND state taxes. Each state has different rules about how far back you need to file and penalties for late filing. I was in a similar situation (4 years unfiled) and got federal sorted out only to get blindsided by my state tax authority, which was actually much more aggressive than the IRS. Check if your state has a voluntary disclosure program too - many do.
That's a really good point I hadn't even considered. I've lived in the same state this whole time, but I should definitely look into their policies. Is there an easy way to find out about state voluntary disclosure programs?
The easiest way is to just google "[your state] tax voluntary disclosure program." Most state tax department websites have a section for this. Some states are surprisingly forgiving if you come forward voluntarily. Be aware that some states have shorter lookback periods than the IRS. For instance, my state only required me to file 3 years back, even though federally I had to do 6 years. Some state programs will waive penalties but not interest on what you owe.
I went through this after 7 years of not filing. Here's what surprised me: for most of those years, I was actually owed refunds! I ended up getting money back for 3 of the 7 years, even after penalties. Since you mentioned having maximum withholding, you might be in a similar situation. I used TurboTax for the more recent years and a CPA for the older, more complicated ones. Cost me about $1200 total for professional help with 4 years, which was worth it for the peace of mind. Don't panic about criminal charges - those are extremely rare and typically only happen in cases of deliberate fraud or extremely high dollar amounts. The IRS mainly wants compliance and their money.
Did you file all 7 years at once or space them out? I heard you should do the most recent ones first.
Taxes on Paypal fees for contractor payments? Tax deduction question
I run a small business and have been paying a few independent contractors through Paypal. I'm getting ready for tax season and realized I'm confused about how to handle the Paypal processing fees for tax purposes. Here's my situation - when I pay a contractor $1300, Paypal takes their cut (around $35), so the contractor only receives about $1265. When I'm preparing their 1099 and doing my Schedule C, I'm not sure which amount I should be using. Do I report the full $1300 that I paid, or just the $1265 that the contractor actually received? I want to make sure I'm handling this correctly so nobody gets surprised at tax time. Also wondering if the Paypal fees are separate deductions somewhere else on my return?
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One thing nobody mentioned yet - make sure you're issuing 1099s correctly in the first place. You only need to issue them if you paid a contractor $600 or more during the tax year AND the payment was for services (not goods). Also, if you paid through credit card networks or third-party payment networks (like PayPal Business), technically they're supposed to issue a 1099-K to the contractor if they meet the threshold, and you don't need to issue a 1099-NEC at all. But the rules keep changing, so double-check the current requirements.
Thanks for bringing this up! So if I paid them through PayPal Business, do I still need to issue a 1099-NEC? I thought the threshold for 1099-K was really high, like $20,000? Or did that change recently?
The 1099-K threshold has been a moving target the past few years. Originally it was dropping to $600 for 2023, but then they delayed it. For 2025 taxes, the threshold is $5,000 - so if your contractor received more than that through PayPal Business, then PayPal should issue them a 1099-K. You still have the option to issue a 1099-NEC if you want to be extra cautious, but technically you're not required to if the payment was made through a payment processor that will issue a 1099-K. Just make sure you keep good records of how each contractor was paid, in case of questions later.
I actually just got done with an IRS audit where this exact issue came up! My advice from painful experience: Keep VERY detailed records of all payment processor fees separate from the actual payments. For me, the IRS wanted to see that I wasn't double-counting the fees (deducting them separately AND as part of the contractor payment). I had to create a spreadsheet showing each payment, the fee amount, and the net amount received by the contractor. Also important: make sure your contractors understand how to report this on their end too, so their reported income matches your 1099s.
Oh no, that sounds stressful! Did you end up owing more after the audit? I'm terrified of audits because my bookkeeping is... let's say "creative" lol.
Suspicious IRS Letter Demanding $5000 for 2022 Tax Year - Is This Legit?
Title: Suspicious IRS Letter Demanding $5000 for 2022 Tax Year - Is This Legit? 1 My grandmother just called me in a panic saying she got a letter supposedly from the IRS claiming she owes $5000 for the 2021-2022 tax year and demanding a $500 payment right away. I haven't actually seen the letter yet but I immediately told her not to pay anything until we figure out if this is legitimate. I'm really suspicious about this whole thing. If she actually owed that much money, wouldn't the IRS have notified her back in April when she filed her taxes? It seems weird they'd wait until August to suddenly demand money. Also, isn't the normal procedure that if you can't pay your full tax bill at once, you'd set up some kind of official payment plan with the IRS rather than just sending random partial payments? She's elderly and I'm worried this might be a scam targeting seniors. Has anyone dealt with something similar or have advice on how to verify if this is actually from the IRS? Should I have her bring the letter to a tax professional?
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7 Something similar happened to my father last year. It turned out to be a legitimate letter but the amount was incorrect due to a missed 1099 form. A couple things to check: 1) Did your grandmother have any unusual income last year - like selling investments, taking an early withdrawal from retirement, or receiving unemployment? 2) Is there any way she could have forgotten to report some income? The IRS computers automatically match reported income from employers/banks against what's on tax returns. 3) Did she receive any prior notices? The IRS usually sends several notices before demanding payment. Ask her to check her mail carefully - sometimes people miss the earlier notices or don't understand what they mean.
19 This is great advice. My mother got a letter because she forgot about a small stock sale that generated a capital gain. The brokerage reported it to the IRS but she forgot to include it on her return. Does your grandmother have any investments or retirement accounts?
7 Both great questions! For unusual income, she did sell some stocks last year after my grandfather passed away. She's not very financially savvy and has been relying on their longtime accountant who's getting up there in age himself. Regarding prior notices, that's actually very possible. She doesn't open all her mail right away and sometimes sets aside things she doesn't understand. I'm going to visit her tomorrow and go through her mail from the past few months to see if there were earlier notices. The investment angle seems most likely based on your experiences. I'll definitely check on that specifically when I see the letter. Thank you both for the helpful suggestions!
16 Be really careful about this - my grandfather almost fell for a similar scam last summer. The giveaway was that they wanted payment in gift cards (which the IRS NEVER does). What kind of payment method does the letter request?
6 Those gift card scams are terrible! My neighbor fell for one of those and lost $2000. Definitely check the payment methods requested. The real IRS offers multiple payment options and NEVER asks for gift cards, wire transfers, or cryptocurrency.
Should I register my friend's construction business under my GST number? (Canada Tax Implications)
Title: Should I register my friend's construction business under my GST number? (Canada Tax Implications) 1 My buddy is currently dealing with refugee status issues and can't legally open a business in his name right now. He was previously running a construction contracting company with another partner who had the business registered under their name, but that partnership fell apart recently. Now he wants me to let him operate under my GST number instead. This isn't some small side gig - the construction contracting business pulls in around 50-65k per month in revenue with profits of about $13-25k monthly. He's got several employees that get paid through the company accounts. I'm really torn because while I do trust him as a close friend, I'm also worried about what kind of legal or tax mess I might be getting myself into. He says not to worry because the company already has an accountant who handles all the tax stuff. Would really appreciate some advice on the potential implications if I agree to this arrangement. What risks would I be taking on? What should I be concerned about? Is this even legal to do in Canada?
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4 Does anyone know if there's a legitimate way for someone with refugee status to operate a business in Canada while their application is being processed? My understanding is that they typically need a work permit with self-employment privileges, but that's different from running a construction company with employees.
22 Refugee claimants can apply for a work permit while their claim is being processed, but there are restrictions. The work permit usually specifies what type of work they can do, and running a business with employees is generally not permitted without permanent residence status or specific entrepreneurial immigration programs. The friend should consult with an immigration lawyer about proper pathways. There are sometimes special programs for entrepreneurs depending on the province, but trying to circumvent the system by using someone else's GST number could jeopardize their refugee claim entirely.
4 Thanks for the clarification. That's what I was afraid of - sounds like there's really no legitimate shortcut here. I'll suggest that my friend needs to consult with both an immigration lawyer and a business attorney before proceeding with anything. Better to do things properly than risk their status and my financial wellbeing.
12 Just want to point out that even if the business has an accountant, it doesn't protect you. A friend of mine got completely screwed when they let someone use their business number. The business racked up like $85k in unpaid GST before my friend even realized what was happening. Even with the accountant signing off on everything, CRA came after my friend personally. The "agreement" they had meant nothing.
9 That's terrifying! Did your friend manage to resolve the situation or are they still dealing with the fallout? Did they have to pay the full amount?
Keisha Jackson
Have you considered setting up a more formal arrangement like a Community Supported Agriculture (CSA) program with the school? My brother did something similar where he: 1. Created a formal business entity for the orchard 2. Set up the CSA with the school as the primary customer 3. Then donated most of the profits back to the school This gave him business deductions for the orchard maintenance plus charitable deductions for the donations. His accountant said this was much cleaner from a tax perspective than trying to donate "use" of the property.
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Paolo Moretti
Wouldn't creating a business entity and then donating back the profits create more paperwork and possibly more taxes than it saves? Seems like you'd have to report all the income first, pay self-employment taxes on it, and then get a deduction for the donation. Am I missing something?
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Keisha Jackson
You raise a good point about the additional paperwork - it definitely creates more administrative work. However, it can still be advantageous in certain situations. The business entity allows you to deduct all legitimate expenses related to the orchard maintenance (equipment, supplies, utilities, property taxes, etc.) against the income. These are deductions you might not otherwise get. While you would pay self-employment tax on the net profit, if your expenses are significant, the net taxable amount could be minimal.
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Amina Diop
Just wanted to add - we did something similar with our maple syrup operation and the local school. Our tax guy set it up as an educational easement on the property, which gave us a one-time deduction for the easement value (which was substantial!), while still letting us own the property. It's more permanent than what you might want, but the tax benefits were significant upfront rather than spread over many years.
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Oliver Weber
Did you have to get a professional appraisal for that educational easement? And was there a minimum time commitment? I'm curious because I have property I'd consider for something similar but don't want to be locked in for decades.
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