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Finally Some Guidance On The Tax Issue-Finally.


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No sales tax. BUT as a CG you are expected to report income for income tax purposes. Just like if you had a lawn mowing sevice, you pay nothing and charge nothing for sales tax, but you report your income and pay income tax on it.

 

Some might say that is only for the labor portion, some would say since you can't deduct expenses related to growing a controlled substance (yet) you pay income tax on all of it. I'd suggest contacting a CPA if you plan on having an income over $600 per PT per year (total compensation).

 

Cedar

Edited by CedarSpringsCG
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No sales tax. BUT as a CG you are expected to report income for income tax purposes. Just like if you had a lawn mowing sevice, you pay nothing and charge nothing for sales tax, but you report your income and pay income tax on it.

 

Some might say that is only for the labor portion, some would say since you can't deduct expenses related to growing a controlled substance (yet) you pay income tax on all of it. I'd suggest contacting a CPA if you plan on having an income over $600 per PT per year (total compensation).

 

Cedar

 

I've wondered for tax purposes if I could simply report income and claim deductions as a "gardener" without getting any more specific... Any thoughts?

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piont is were not selling anything, we are being reinbursed for a service/product. no one get money up front for meds or electric, supplies. what is to tax, i think were lucky to get our money back.. if your profiting, your selling, we are not selling. i think thats the point for taxation.

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Guest OxXGarfieldXxO

Pretty important topic. I'd love to give Michigan my share in taxes. This state needs it. Our roads need it. Our towns. But until I'm safe say using "gardener" as a vocation (or similar), I'm not declaring anything. What a tax base they could get if they quit fighting us at every turn. $12.00 on each (paid for-I give out a lot of free ounces too) $200.00 oz....From all us caregiver? But not at the cost of some investigation or seizure of my home. Even if I could win, I can't chance the encounter.

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I'm with Willy on this and I think even more confused than before. I keep receipts and take compensation from my patients to offset them to zero, not profitting though so I'm thrown off as to what was being implied when it was written that I'd still have to 'report income'.

How can someone get an income off something that they are not making any profit off of?

The plants are the patients, not mine, I only tend to them as thier CG. The receipts show my patients the cost it takes for me to grow thier plants and they reimburse me that money so what is there to report, at all?

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No, you are health service technician... can't think of the actual name now, but you provide caregiver services, that is the same as a meals on wheels, some hospice workers, etc.

 

You're not a "gardener" you are a caregiver by definition and title. What care you provide, they do NOT need to know. Caregivers can generally expense anything that is used in conjunction with their service, gas money to get to the patient, nursing uniforms, etc, so I personally think you should be able to subtract out expenses first... But please talk to a CPA and don't take my word for it.

 

There are 2 ways to go about it, subtract it out and then declare what is left over, or declare it all and put in expenses for receipts. Declaring it all seems illegal at this point federally, but that may change soon with some of the bills introduced last week.

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"Declaring it all seems illegal at this point federally"

So is declaring 'some of it' at this point ok?

 

Paragraph 1 of the above document is saying that we provide a non-taxable caregiver service. On top of that if the MMA specifically states that a transaction between a CG & PT is not a sale then how or what do we actually file and where, state....federally or both?

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See, the treasury is commenting on "sales" tax. That is the 6% tax added onto everything when you buy things like a hair brush. They are NOT commenting on income tax. You providing a service to someone else that pays you is not sales taxable as a service, but the income you generate is taxable as income tax. That's the part most people misunderstand. Income is anything paid to you for performing a service.

 

Income tax is income tax. It is all taxable, no matter what you are doing to get it. If you have income, you have tax. When you file your taxes in April, you are required to declare any source of income if it is over $600.

 

This PDF above is for sales tax, which is filed quarterly or monthly, depending on volume of sales.

 

As far as declaring some of it, I mean to say "declaring it AT all" I missed the "at" in there. However you might get away with declaring some of it for travel expenses, etc. It gets a lot easier if you are in a county that allows you to register a Home Based Occupation. Once again, please contact a CPA for specifics and what they recommend to keep out of an Audit.

 

If everyone followed the law (and I mean the IRS and State treasury) then we could declare all expenses. The tax code says you cannot deduct expnenses for an illegal operation, and Federally any cultivation of MMJ is illegal(for now). So the IRS will say you cannot deduct for lights, nutes, etc. HOWEVER, strictly interpreted, those are expenses for a caregiver service, not for cultivating marijuana. So you can deduct the expenses. But in an Audit, I am told the IRS will not see it that way. So, if you are actually turning a profit on this, and charge each of your PT's more than $600 per year, please get a CPA who will back you up in an audit.

 

Cedar

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To help clarify sales tax and income tax...

 

If you call up a refrigerator repairman, he comes out and fixes your Refrigerator. He charges you $100 for his "service" and $100 for parts. You pay $206, which is $100 in service, $100 in parts, and $6 in sales tax ONLY ON THE PARTS. That Tax money is sent into the treasury each month.

 

Now he goes home and files his income tax, and he puts down $100 from you as income and pays tax in April on that personally.

 

That is a rather basic view of it, but I hope it makes things clear.

 

Cedar

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Several years ago, while at the full height of the war on drugs propaganda, the Congress of the United States passed another law to punish cannabis consumers.

 

Tax code 280e.

 

According to that tax code passed by congress, we are not allowed to claim any deductions from income at all if our business revolves around schedule 1 or 2 drugs.

 

That includes "cost of goods sold."

 

Example .. I do a favor for my patient. They need an oz. So I find an oz for them. It costs me $300 (cost of goods sold). I deliver it to my patient for $300. According to 280e I must pay income tax on the $300.

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I consult with Mr. Campbell of NUMBERS on my MMJ tax issues, and thus far have been very happy with the results, i.e. no calls from the IRS or Treasury Dept (yet).

 

His prices are very reasonable for consultation, small business set-up, and tax filing.

 

I would recommend anyone who is involved in MMJ and is providing service as a caregiver to consult with:

A Lawyer- I use Komorn

An Accountant- I use Campbell

A Business Adviser-I use Campbell

 

The money spent on their services is well worth the value to mitigate risks associated with federal and local government agencies, and to provide you with as much peace-of-mind as one can have in the Blue Ocean that is MMJ.

Edited by Frank R
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Won't Growing MM, be under the right to farm act and buying products to culivate be non taxable?

Actually I have had a "against mmj" lawyer tell me that MMJ doesn't fall under the right to farm act, because... get this... The right to farm act requires accepted growing standards, and MMJ does not have any.

 

I can't recall the exact term, but that was basically it, there is no accepted agricultural guidelines for this plant, so the right to farm act is not applicable...

 

Maybe I should start a new thread on that one.

Cedar

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Actually I have had a "against mmj" lawyer tell me that MMJ doesn't fall under the right to farm act, because... get this... The right to farm act requires accepted growing standards, and MMJ does not have any.

 

I can't recall the exact term, but that was basically it, there is no accepted agricultural guidelines for this plant, so the right to farm act is not applicable...

 

Maybe I should start a new thread on that one.

Cedar

 

Check this out:

 

MSU Extension offers advice on growing medical marijuana

By Lauren Gibbons | Originally Published: 04/13/11 9:10pm |Modified: 04/13/11 9:10pm | 2 comments

State News Link

 

In response to the legalization of medical marijuana in Michigan with the 2008 Michigan Medical Marihuana Act, MSU Extension is making advice available to those with questions on how to care for medical marijuana plants safely and effectively.

 

MSU Extension representatives are giving advice to parties growing medical marijuana regarding insect control, concerns on plant nutrition and other information on growing the plant indoors, said Jeanne Himmelein, an MSU Extension educator with a specialty in environmental quality and greenhouse and nursery production.

 

Although she said she has not received many calls regarding the specific care of medical marijuana plants, Himmelein said it was important for those who have questions to get correct information on growing the plants from a credible source to avoid any difficulties.

 

“We do want (growers of medical marijuana) to follow laws and regulations,” she said. “We’d rather have them come to us than go to the local hardware store and guessing.”

Himmelein said MSU Extension is in the process of creating a general guide to caring for indoor plants, which would give interested parties tips on how to grow and care for various indoor plants, including medical marijuana.

 

Luke Smith, a student who asked that his real name be withheld to prevent potential legal ramifications, grows medical marijuana in his home. He said many factors — including lighting, insects and temperature — affect the success of any given medical marijuana harvest and said the process is not something a person should go into halfheartedly.

 

“It’s a lot harder than people picture — it takes a lot of patience, and you have to put a lot of time, money and effort into it,” he said.

 

Smith said finding credible information on how to grow medical marijuana is helpful, but said the process is mainly trial and error and is something the grower has to work at to improve results.

 

“In the end, experience is the only way to ensure a good harvest,” he said. “You have to mess up a few times to fix all the specific problems that go wrong.”

 

Zach Jarou, scientific director at Cannalytics, a cannabis testing laboratory in Lansing, said information about how to grow medical marijuana readily is available but not always accurate.

 

“If you do an Internet search for growing medical marijuana, there’s no evidence behind a lot of the solutions (for growing problems),” Jarou said. “Getting that information from a credible source is crucial.”

 

Himmelein said she is open to providing advice to those with questions on how to care for their medical marijuana plants because it is a legal plant in Michigan being used for medical reasons. She said it especially is important for growing operations to be done safely because of the nature of use.

 

“It’s been identified that there is a need (for information on indoor plants), and it’s fine that we can share,” Himmelein said. “Our ultimate goal is that it’s being done in a safe manner because we know it’s consumable.”

 

Go Green!

 

Go State!

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