I hate tax season. It’s the time of year the reminds many of us unorganized types that we need to do a better job keeping records. That’s because in any business, record keeping is key to minimizing your tax liability and only paying Uncle Sam what you legally owe.
You may not realize this, but if you trap a significant amount of fur, your trapping activities are probably considered a business by the IRS. That means you may have to claim your income, and keep track of your expenses. That may seem intimidating, but it’s not really all that bad.
John Chagnon from PCS Outdoors, a major trapping supply company, has offered some great advice to trappers when it comes to tax time. Here’s an excerpt:
Trapping is a business venture, whether you do it full-time or part-time. We collect revenue from the sale of our furs and pay expenses in the process of collecting the furs. When the total amount we collect from the sale of our furs is less than the amount we spend on supplies and other expenses; we can take a loss on our tax return, which lowers the amount that we have to pay Uncle Sam and Mr. State. Or, if you already have a refund coming, the trapping loss would increase your tax refund, assuming you have a job that withholds taxes from your paycheck.
If you receive a Form 1099 Miscellaneous Income Statement from the sale of your furs, you will be required to report that income, because a copy of the form is also forwarded to state and federal tax authorities. You could just report the income and pay taxes on it, or file a Schedule C and deduct your expenses from the income.