Profit from having your woodlot logged can raise your income taxes. Plan ahead to save yourself money and headaches at tax time.
If you're like a lot of landowners, logging doesn't happen often on your woodlot. Rather than risk audits and penalties, consider hiring a tax professional when you have timber-related income.
How you report income from logging and how much tax you owe depend on which of 3 tax classes your woodlot falls into. You can determine your woodlot's tax class by answering a few simple questions about why you own it and how you use it.
You can subtract the value of the timber when you first purchased or inherited your woodlot – your "basis" – from your taxable income when you have a timber sale. This reduces your taxable income. If you don't know your woodlot's basis, a consulting forester can help you determine it.