20 Aug Legitimate Tax Tip Adding a Potential $14K Deduction!!
This little tax tip I’m about to share will let you write off an extra $14,000/year for your business while putting the money in your pocket tax free.
At this time of year, you are probably thinking it’s time to hold your annual board of director, partnership or shareholder meeting. It’s normally a requirement to hold these meetings if you own a corporation, partnership or LLC.
Most businesses rent out a hotel or meeting facility to hold their business meetings. In major cities like Los Angeles, New York or Las Vegas, the cost of renting a meeting room with audio/visual equipment and catering can cost more than $1,000/day.
Under the tax code, your company can choose to rent out a home instead of a meeting room to hold its business meetings. By utilizing this option, instead of paying a hotel or meeting facility, your company pays you rent for the purpose of renting out your home to hold the meeting.
But it gets better. Under section 280A of the tax code, the homeowner does not need to report this rental income as taxable income on his/her personal return. Why? Because the law allows you to rent out your home for up to 14 days a year tax free.
This means your company can rent out your home for 14 days per year, enough to let you hold twelve monthly Director/Board Meetings, one Semi-Annual meeting, and one Annual meeting. At $1,000/day, that’s $14,000 you’ll be able to write off against your business income as a rental expense and to pocket as non-taxable money.
So what do you need to do to take advantage of this tax tip?
First, you’ll want to find out the rates to rent out a meeting facility. I suggest you call up your local Four Seasons to find out what they charge for meeting space. I also recommend you get documentation from them to substantiate the quote.
Second, you’ll want to make sure you take minutes of each meeting.
And lastly, don’t forget to have your business issue you a 1099 at the end of the year for the rental income.
Sounds great right. Just two caveats. You actually have to make money to take this write off. In addition, the rental fee you can charge your company must be fair and reasonable relative to your company’s income. This means if your profit this month is only $1,000, you can’t turn around and rent your home for $2,000 to hold a meeting.
If you take advantage of this tax tip, the end result is you have $14,000 of non-taxable money you get to keep in your pocket instead of sharing it with Uncle Sam.