Fishing Taxes - Forums Archive

Jon

2007-02-13 18:06:11

Well I finally got around to going through all my receipts for the 2006 salmon trolling season so that I can start my taxes.

Every year I get better and better at using the tax laws to my advantage -- I remember in the beginning -- back when I was longlining, I didn't even know enough to take my standard deduction! I can look back and see thousands of dollars I gave to the IRS for no reason at all.

I've heard of some good tax breaks I may be able to use in order to keep more of my money where it belongs this year. As I learn more I'll be posting the specifics of what I find out.

1) I'll be looking into per diem write-off's for food and lodging to see how it can be applied to fishing.

2) A pretty simple one, but new to me this year, will be paying Angie as a crew member.

3) I'm not sure if I can write-off boat and permit payments, but I'm going to look into it.

-Jon

Jon

2007-04-13 21:23:31

Well I never did find out about the per-diem deductions but I did find out what to do in order to report a crewmembers wage.

You fill out an IRS form 1099-MISC (there's a place to put down income from fishing) and send it in with a form 1096. Both forms are required and neither can be downloaded and printed out online because they're on carbon paper to make 4 copies.

So that means you actually have to go down to your local IRS office and pick them up (get a spare or two in case you make a mistake). The post office doesn't carry these forms. In fact my IRS office didn't have them on the racks, they were behind the counter, go figure.

I ended up paying about 6% of my gross fishing proceeds to the IRS this year. Nice and low but I had a heck of a lot of expenses into repairs, gear, and all the other work we did on the boat.

-Jon

vex520ak

2007-08-16 18:17:06

Rotten taxes. I believe we should all contribute to our country; roads, schools and all that noise. Trouble is they don't do anything good with most of what they take. I was a Marine for a good while and I couldn't even get a canteen that held water or a rifle that went "bang" more often than not. I carried an expensive club for six years. I wont even mention the shortage of toilet paper. Although I did see an Airforce guy fly past in a billion dollar stealth fighter once. I bet he had an air conditioner.

Meanwhile, anyone have anything good to say about TurboTax or other software? This tax law malarkie is driving me nutty. So far I'm estimating between 6.5 and 8% of gross. I'm having a hell of a time figuring what.. well, I'm having a hell of a time. I sure don't want to get in trouble! I've heard all about what goes on in those prisons.. basic cable and bland meatloaf every other Tuesday night. I couldn't handle that. I suppose I could pay someone to do it all for me, if I could afford to, after taxes.

Yeah, tax software that works well for fishermen would hit the spot.

vex520ak

2007-08-16 19:18:27

Ah.. the IRS. No foul language in the forum so, I digress. Apex my man, look into National Marine Fisheries Service, Capital Construction Fund. It's a wordy, needlessly complicated addition to an already convoluted financial obligation system which has obviously been put together by a team of highly educated and equally sexually frustrated lawyers with waaaay too much time on their hands. It also seems to be an excellent means of protecting your hard earned Abe Lincolns from the soft, pale, manicured and sticky hands of the IRS. Unless I'm mistaken, you can use the program to write off payments to principal on your boat loan and also shelter the money you want to use for improvements to the boat, like new engines, paint, flat screen televisions etc. (ok, maybe not TV's) You can put your money into stocks, bonds, ETFs and the like and earn a tax sheltered yield on your money. Better yet, you can stick cash into the fund and withdraw it an hour later to make payment on your loan and you pay no taxes on it. You hand it over, they hand it right back and Shazzam, no taxes! Terms and conditions really do apply though. You have to be approved by NMFS and so on. I just started looking into this stuff myself so I'm still suspicious. It sounds like a joke and it very well could be, but oh well. I, for one, could use a good laugh.

Here's a link to a law firm web site with info related to the NMFS CCF. NMFS has info on it's own program of course, but like any govt. documents you'll go nuts trying to read it. This web site seems to make sense.

~~[url=~~http://www.baldwinhaspel.com/publications-77.html][url]http://www.baldwinhaspel.com/publications-77.html

Check it out.

Jon

2008-01-29 20:31:35

Thanks for the info on the CCF. I know my dad has one but I haven't gotten that far yet.

I recently did my 2007 taxes and found some more information about the per diem deductions for meals and lodging while on a fishing boat.

I'd heard rumors that the captain of a troller could deduct a flat rate of $150/day for each day of the season. That sounded great to me... 4 months in Alaska multiplied by $150/day would be an $18,000 deduction.

However when I dug into the tax law it clearly states this deduction is only applicable if you are traveling for your business outside of your primary 'tax home'. For any fisherman who's primary business is fishing, their boat becomes their tax home. When you tie up at the dock in say, Sitka, Sitka is now also included in your tax home. So since you're aren't traveling outside of your tax home for business, you cannot deduct any meal or lodging expenses EXCEPT 50% of what you supply to your crewman but ONLY IF you include that have declared that expense as a wage paid to a crewmember.

For more in-depth information see Page 48 of the attached IRS publication.

From: ~~[url=~~http://www.nysscpa.org/cpajournal/2005/105/essentials/p40.htm][url]http://www.nysscpa.org/cpajournal/2005/105/essentials/p40.htm
These per diems cannot exceed the estimated actual expenses

As far as I can tell there's not really anything for a troller to gain by using this per diem method.

Jon

2008-01-29 20:46:17

The IRS has a publication specifically for commercial fisherman but it hasn't been updates since 2001.

~~[url=~~http://www.unclefed.com/IRS-Forms/2001/HTML/p595toc.html][url]http://www.unclefed.com/IRS-Forms/2001/HTML/p595toc.html

The document says you can depreciate the cost of a new boat over 7 years but the latest tax laws I've read say you have to do it over a 10 year period.

fishkilla

2008-03-17 13:04:43

I don't know about TurboTax or any of that, but I would highly recommend having a tax preparer/accountant/financial advisor do your taxes and give you some tips about what is/isn't deductible. I paid mine $233 this year and I am actually getting a refund for once in my life. I always wondered what people with normal jobs were talking about. The best part about having someone, especially someone who does fishing taxes often, is that you know it's being done right, and I can write off the $233 next year that I spent this year. Plus, laws always change or are updated.

For those of you unfamiliar with what you can deduct, here is a list that my accountant sent me:

taxes & licenses, insurance, trade publications relating to fishing/vessel purchases, tax preparation fees (2006), travel, lodging, business meals, repairs/maintenance (list boat repairs separately from any vehicle repairs), office supplies, purchases of assets (boats, equipment, computer/printer, gear, etc) – list these separately with dates of purchase as well as item description and purchase price, mobile phone charges, business bank account service charges, check printing for business account, supplies, postage, groceries for crew while working, totals paid to deck hands…..

I don't know if I would count out that new flatscreen just yet, if it's installed on your boat. ;) That and clothing. If I only knew all my shopping sprees I did in high school after the salmon season were deductible, the man would not have had so much of my money.

Ocean Gold

2008-03-17 14:59:00

Get everything together and in order then find a good accountant. Don't try depreciating boats and amortizing Permits on your own, they are very different schedules. As far as per diems that is worth looking into. Good Luck

Ora-K

2008-03-17 18:02:50

My new tax guy reviewed my old 2006 return and he re-filed my 2006 return to claim a per deim deduction that my first tax guy didn't take. haven't got it back from the gov. yet..... but my guy said there are two rates, one rate while your at a dock somewhere and a different rate when your on the hook. Harry

Salty

2008-03-17 21:16:46

Something to talk to your accountant about in regards to paying your partner is to make sure that he credits it toward social security. My wife, a retired teacher, needed some more quarters to qualify for social security. Since we file jointly, declaring her income does not make a difference on our eventual tax bill but it does on her qualifications for Social Security.

It is also great for your partners morale to get paid. I pay Sarah every trip. When we fish out of Elfin Cove and sell on the grounds I pay her every delivery. She often ends up helping with some family expense out of her fishing earnings but she feels good about having control over her earnings.

~~[attachment=0]~~Sarah Jordan, 11.jpg[/attachment]

Ocean Gold

2008-03-18 00:22:45

How in the world do you get money to pay your wife? My wife gets the whole check and the fuel bills. ;-)

Salty

2008-03-18 03:25:06

Alaska Highliner: Troller with a tier 1 wife. Tier 1 wife at work.~~[attachment=0]~~Sarah landing fish 1 1.jpg[/attachment]

fishkilla

2008-03-20 01:11:52

3) I'm not sure if I can write-off boat and permit payments, but I'm going to look into it.

You can't write off the payments, but you can write off the interest you pay every year. In my case, it ends up being about half my payment...

Salty

2008-03-20 04:51:08

And you can depreciate the boat and equipment. Necessary expense for a troller is an accountant to prepare your taxes.

John Murray

2008-03-21 01:44:38

H ey I thought you guys only used flasher gear on the I-Gota.

tacorajim

2008-03-21 02:09:52

Not sure if I'm reaching out too far here, but it's on topic. A couple of Ilwaco locals . . . in the $100k plus gross category bought new trucks last year at this time even though what they had was ample (or even better), because their tax advisors said they could write them off in a year if they were over 8000 GVW. Now a year later the same guys seem happy with this advice.

From the old days I remember Alan Anderson as a CPA first, an accountant, and a highliner's son. If I was still up there I would talk to Alan. He knows.