Questions people actually ask

It is real. It comes from Section 280A(g) of the tax code, which says that if you rent out a home you live in for fewer than 15 days in a year, you do not report that rent as income. Congress put it in the code in the 1970s, long before anyone made a video about it. What the short videos leave out is the paperwork that has to sit behind it, and that missing part is where people get into trouble.

The written lease between you and your business, signed and dated before the meetings happened. Proof of where your rent figure came from, which means local rates for similar space, saved with the source and the date you pulled them. Something showing each meeting really took place, like an agenda or minutes with the date and who was there, plus the bank record showing the business paid you close to the dates in the lease. The IRS normally has three years from when the return was due or filed, whichever is later, to open an exam, so most people keep all of this with that year’s tax records for about seven years.

The rate has to look like what an unrelated person would pay for similar space in your area on that kind of day, and the space you compare against should be close to what you actually used at home, not a hotel ballroom. Owners have lost this deduction in court when the daily rate was too high to defend and the proof that the meetings happened was thin. A4B searches rentable spaces near your address, pulls at least three real day rates, and shows you the high, the low, and the average for your area. Those listings stay in the report, so the number can still be explained years later. A figure at or below the middle of that range is usually easier to explain than the top of it.

If the deduction cannot be supported, it comes off the business return, and the extra income goes to whoever reports that business income. For an S-Corp, a partnership, or a multi-member LLC, that is you and any other owners on your personal returns, and for a C-Corp the tax is owed by the company. Interest runs from the original due date either way, and an accuracy penalty can be added when the records are thin or missing. The payment may also be re-treated as a distribution or as wages instead of rent, which changes what you owe on it. Records made at the time, instead of rebuilt years later from memory, are what keep an exam short.

The rule needs two separate parties, you as the homeowner and your business as the renter. A sole proprietor is the same taxpayer as the business, so paying rent to yourself just moves money from one pocket to the other. The same goes for a single-member LLC that reports on Schedule C, which is the business form that sits inside your personal return. A quick check is where your business income is reported, and if it is on a Schedule C, this one is not for you. A4B is built for an S-Corp, a partnership, a multi-member LLC, or a C-Corp, and that includes a single-member LLC that has elected to be taxed as an S-Corp, because those file their own returns.

Owning the home jointly with your spouse is the normal case and it does not block anything, since the business pays rent for the home and the two of you receive it. Having business partners does not block it either, because the renter is the business and not any one owner. What matters is the same check as the question above, whether your business income is reported on a Schedule C or on its own business return. A husband and wife LLC can end up on Schedule C two ways, through the community property state option (Texas, California, and Arizona are three of the nine) or through a qualified joint venture election, which any married couple can make anywhere. If either one applies to you, the income is on your personal return and this does not work, and your tax preparer can tell you which one you are in.

It can work, but only if the place counts as a residence for you, and there is a real test behind that word. A cabin you visited for one long weekend, or one that is listed on a short-term rental site most of the year, usually fails that test, and a property you rent out full time is a rental and not a residence. Counting those days with your tax preparer is worth doing before you plan around it. If you do have more than one property that passes, A4B covers up to three locations on one account.

Yes. A day counts as a day even if the meeting runs three hours, so a short board meeting uses one of the 14. The law counts by calendar date, so two separate meetings on the same date are one day and not two. A4B caps the report at 14 entries and each entry is one meeting, so two meetings on one date would use two of your 14 entries even though the law sees one day. The limit itself runs per home, so a second qualifying property has its own count, and it is a limit in the law rather than a setting we chose.

Fifteen days or more turns off the exclusion, which is the part that lets you receive the rent without reporting it, and it turns off for the whole year and not just for the extra day. The rent for every one of those days becomes rental income on your personal return. The deductions you would normally get against rental income are limited or denied in this situation, so it is worse than an ordinary rental and not the same as one. The day that takes you to 15 can cost far more than it was worth. A4B stops the report at 14 so the documentation you keep never crosses that line.

Your business deducts the rent it pays you, and you do not report that rent as rental income, so the saving depends on your daily rate, how many days you use, and the rate you actually pay on business income. Rent times your tax rate is the rough version, and it usually overstates it. If your business qualifies for the qualified business income deduction, the 20 percent deduction many pass-through owners get, then deducting the rent lowers that deduction too, so the net saving comes out smaller. The calculator on this site runs your own numbers, and your tax preparer can tell you how it looks on your actual return. We do not promise a figure, because it depends on your rates and your own return.

Some do, and if yours already pulls local comparable rates, writes the lease, and keeps the backup for every year, you may not need us. More often that research and paperwork sits outside a standard tax return job, so it is worth asking yours what the extra hours would cost. You can also build the file yourself if you have the time for it. The slow parts are finding real local rates and saving proof of them, writing a lease that fits your state, and keeping a record of what happened on each day. A4B is not a tax firm and does not file anything, so what it gives you is the support file for whoever prepares your return.

The $249 covers one tax year. Each year you want to use the rule is its own purchase, because it needs its own local rates, its own lease, and its own record of the days. Nothing renews on its own, so you are not charged again unless you come back and buy the next year yourself. After that year's access ends you can still open and download your finished report. You just cannot change it anymore.

Only if that year already happened the right way, meaning you really held the meetings, you had a rental agreement in place at the time, and the business actually paid you from its account before the year ended. Most small businesses are on a cash basis, so rent that never moved is not a deduction, whatever the paperwork says now. What A4B adds is the comparable rate research and the assembled file, and it will not produce a lease dated earlier than the day you fill it in. A document signed today but dated to a past meeting is a made-up record, not a paperwork gap. The rates it pulls are current listings, so on a prior year they support your number rather than show that year's prices, and your tax preparer can tell you whether the year is worth revisiting at all.