How a Frugal Prosumer Heats His House for Free
This is an article John & I wrote back in 2009. It is a true story of real people. The names have been changed as some people get their undies in a bundle and try to cause trouble for those who are different and do things out of the ordinary.
This is a story about Prosumer, his wife, FinalFrontier, and their high school aged son, WildThing and how they live a prosumer lifestyle. These are all true stories that could be taking place in a neighborhood near you. Some of the facts and figures have been adjusted to protect the identity and privacy of the individuals mentioned and to minimize the opportunity for the master consumers to silence the voices of the master prosumers.
Today we are going to take a peek at how TheProsumers heat their house for free. No! That is, how they get paid to heat their house and get a tax break for doing it! To be a master prosumer you need to develop the habit of not only killing two birds with one stone, but killing a dozen birds with half a stone. In this story we will see how in one “fowl” swoop Prosumer has quality time with his son, homeschools him, teaches him a valuable trade, saves on taxes, avoids working at a job he dislikes, gets his exercise, enjoys the great out of doors, heats his house for free and gets a tax deduction while both he and his son get paid for it.
Prosumer and his teenage son WildThing structure their lifestyle so they can have lots of fun time together. Okay, quality time, for the politically correct. This has been their habit every day since the day WildThing was born at home and spent his first night snuggled under his dad’s armpit. Now that’s bonding. Believe it or not, contrary to the generation gap thing, they really enjoy each others company (at least most of the time).
Let’s start this story with setting up a tree cutting business. Then let’s help a friend of theirs who has a tree that needs cutting down. This is a big tree that “professionals” would charge about $3,000 to drop. They are delighted that Prosumer and WildThing will do it for a $1,000. Prosumer is delighted that he can save his good friend so much money.
Taking down a tree of this size involves some special skills and tools. One of WildThing’s homeschool “PE classes” involved climbing trees with special ropes and harnesses. Then, much to FinalFrontier’s motherly horror, actually camping way up in that tree where surely he will fall to his death and......um anyway. These skills came in very handy because the tree stood between two houses and had to be taken down piece by piece. This job required chain saws, ropes, cables, various other equipment, and of course, a camera to film it all. FinalFrontier just couldn’t watch.
Now when your equipment is necessary for the business you have, you are legally allowed to write off the cost of the equipment as an expense and deduct that from your income. Hold on. This isn’t too hard to understand.
Basically your child is exempt from state and federal taxes if they earned less then $5,000 for the year. And Internal Revenue Code Section 3121(b)(3)(A) says wages you pay to your under18 year old child are exempt from social security tax for wages if you are a sole proprietorship or husband and wife partnership. Right brain off , left brain on, eh?
The only part Prosumer could write off, though, was a new chainsaw he needed for this job because all the rest had already been business expenses for other businesses he and his son had stared as part of their homeschool curriculum. One day WildThing’s mom and dad sat down and figured their son had been involved and exposed to over 20 business ventures as part of his home schooling. Their son’s homeschool hadn’t really cost them money. Instead it made them money and, best of all, dad had an excuse to play and get business equipment (new toys).
Now when they were paid, unlike a paycheck from most employees, they got the full $1,000, not $807.63 after all the deductions. After deducting the chainsaw, gas, and cost of hauling the wood away to the “dump” (TheProsumers back yard) there was $600 left. Dad got paid $200 and WildThing who did the more dangerous and harder work got paid the other $400. The nice thing about WildThing’s pay was it is all tax exempt.
Now you say what’s so good about that $200 for a week of work? Well, actually it took about a month because they usually worked only for a couple of hours a day. They had to go to the beach and do “other things” more important than working as “consumers”. Like living a prosumer life. oooooh!
Stay tuned for future articles about another benefit TheProsumers get from their tree cutting business. Such as building rustic furniture and using the chainsaw chips to compost and recycle their body waste. Gasp! Not the “p” word? Just when you thought recycling meant only putting your cans, bottles and paper in separate bins!
These are just a few of the many advantages and tax breaks that come as a result of being a prosumer.
Being a Consumer means:
Today we are going to take a peek at how TheProsumers heat their house for free. No! That is, how they get paid to heat their house and get a tax break for doing it! To be a master prosumer you need to develop the habit of not only killing two birds with one stone, but killing a dozen birds with half a stone. In this story we will see how in one “fowl” swoop Prosumer has quality time with his son, homeschools him, teaches him a valuable trade, saves on taxes, avoids working at a job he dislikes, gets his exercise, enjoys the great out of doors, heats his house for free and gets a tax deduction while both he and his son get paid for it.
Prosumer and his teenage son WildThing structure their lifestyle so they can have lots of fun time together. Okay, quality time, for the politically correct. This has been their habit every day since the day WildThing was born at home and spent his first night snuggled under his dad’s armpit. Now that’s bonding. Believe it or not, contrary to the generation gap thing, they really enjoy each others company (at least most of the time).
Let’s start this story with setting up a tree cutting business. Then let’s help a friend of theirs who has a tree that needs cutting down. This is a big tree that “professionals” would charge about $3,000 to drop. They are delighted that Prosumer and WildThing will do it for a $1,000. Prosumer is delighted that he can save his good friend so much money.
Taking down a tree of this size involves some special skills and tools. One of WildThing’s homeschool “PE classes” involved climbing trees with special ropes and harnesses. Then, much to FinalFrontier’s motherly horror, actually camping way up in that tree where surely he will fall to his death and......um anyway. These skills came in very handy because the tree stood between two houses and had to be taken down piece by piece. This job required chain saws, ropes, cables, various other equipment, and of course, a camera to film it all. FinalFrontier just couldn’t watch.
Now when your equipment is necessary for the business you have, you are legally allowed to write off the cost of the equipment as an expense and deduct that from your income. Hold on. This isn’t too hard to understand.
Basically your child is exempt from state and federal taxes if they earned less then $5,000 for the year. And Internal Revenue Code Section 3121(b)(3)(A) says wages you pay to your under18 year old child are exempt from social security tax for wages if you are a sole proprietorship or husband and wife partnership. Right brain off , left brain on, eh?
The only part Prosumer could write off, though, was a new chainsaw he needed for this job because all the rest had already been business expenses for other businesses he and his son had stared as part of their homeschool curriculum. One day WildThing’s mom and dad sat down and figured their son had been involved and exposed to over 20 business ventures as part of his home schooling. Their son’s homeschool hadn’t really cost them money. Instead it made them money and, best of all, dad had an excuse to play and get business equipment (new toys).
Now when they were paid, unlike a paycheck from most employees, they got the full $1,000, not $807.63 after all the deductions. After deducting the chainsaw, gas, and cost of hauling the wood away to the “dump” (TheProsumers back yard) there was $600 left. Dad got paid $200 and WildThing who did the more dangerous and harder work got paid the other $400. The nice thing about WildThing’s pay was it is all tax exempt.
Now you say what’s so good about that $200 for a week of work? Well, actually it took about a month because they usually worked only for a couple of hours a day. They had to go to the beach and do “other things” more important than working as “consumers”. Like living a prosumer life. oooooh!
But we do have to factor in some of the other benefits:
- In the process Prosumer taught his son responsibility by having his son share in his part of the household expenses. Which this month came to $350, still leaving WildThing $50 cash in his pocket and a new marketable tree cutting skill that could earn him even more money.
- Being good stewards of the earth, the tree wasn’t hauled to the dump but was used to heat their house. This saved about $500 in fuel and money that would have gone overseas and increased our trade deficit. Wow! What a patriot too!
- Instead of paying $150 Social Security tax on the $1000, the only legal due was $30 on the $200 dad earned.
- All the woodcutting gear used for the tree cutting business is a tax deductible expense. Now here comes the part about taxes that seems to disturb some people. Prosumer doesn’t say the law is right or fair. He simply follows the law and does what it allows. He does like to ask people if they take their personal tax exemptions, standard deduction, or any other deductions that the tax law allows. He then adds,” Why do you think that’s fair when you take it?”
- Because the TheProsumers spend so much time prosuming, their cash income is so low they are now eligible for fuel assistance. This means they are eligible for fuel assistance for the little bit that they need, for the time they don’t heat with wood.
- The downside of this is: Next year, unlike the people who go on using nonrenewable fuel and don’t do something about our dependency on foreign oil companies, the Prosumers will not get fuel assistance because they are not buying from the utility company. Remember fuel assistance money goes directly to the utility company not to the people. If you decide to be a prosumer and a responsible citizen by not burning fuel from a utility company, you don’t get rewarded like a consumer would. Put that in your chimney and heat with it!
- Because their income is so low, they are also eligible for about $8,000 worth of health insurance for WildThing and his parents. The name, like WildThing, means accident insurance is a good idea.
- Because of their low income they are eligible for over $1,000 in real estate tax refund and over $2,000 earned income credit because their child is under 19 years old. There are even more tax benefits than these that a prosumer could benefit from depending on the circumstances.
Stay tuned for future articles about another benefit TheProsumers get from their tree cutting business. Such as building rustic furniture and using the chainsaw chips to compost and recycle their body waste. Gasp! Not the “p” word? Just when you thought recycling meant only putting your cans, bottles and paper in separate bins!
These are just a few of the many advantages and tax breaks that come as a result of being a prosumer.
Being a Consumer means:
Using what others produce.
Being a Prosumer means:
Producing for yourself what you consume and being gentler on the pocket book and the planet.
Prosumers go by the motto of:
- Use it up
- Wear it out
- Make it do
- Do without
- And if you have to have it: Borrow it, Barter for it, Share it, Get it second hand, Make it or Do it yourself.
The 7 R’s of the Prosumer:
- Reuse
- Refuse
- Reduce
- Resale
- Re-evaluate
- Re-educate
- Recycle
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