When to Issue a 1099 and How to Report It

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If you’ve ever wanted to move money from your business to yourself without paying extra tax, this episode is for you.

In this episode, you’ll learn how the Augusta Rule, also called the 14-Day Home Rental Rule, lets business owners rent their personal homes to their own business and receive that income completely tax-free. You’ll also learn exactly how to document it, what proof the IRS expects, and the common mistakes that can get this strategy disallowed.

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Chapters

(00:44) Why the Augusta Rule Exists
The history of the rule, starting with homeowners in Augusta, Georgia, who rented their houses during the Masters Tournament.

(02:07) What the IRS Code Actually Says
This strategy came from homeowners in Augusta, Georgia, who rented their homes during the Masters Golf Tournament. The IRS decided that short-term home rentals of 14 days or less don’t count as rental properties and therefore don’t create taxable income.

(03:09) How to Use It as a Business Owner
You can legally rent your personal home to your own business for legitimate events and claim a business deduction while keeping the income tax-free.

(04:21) What Not to Do
Why you can’t just write yourself a random check without documentation or a valid business purpose.

(04:53) 4 Key Steps to Make the Augusta Rule Work

There must be a clear business reason, like a meeting or retreat. Set a fair rate using local hotel or Airbnb prices and keep proof. Create a short rental agreement with the purpose, dates, and rate, then pay yourself from the business account and keep records.

(07:10) When to File a 1099 to Yourself
If total rental payments exceed $600, you must issue yourself a 1099 and clear it out on your return under Section 280A(g).

(07:50) Example: Putting It All Together
A sample year with quarterly board meetings, a team retreat, and training events shows how this can total over $7,000 in tax-free income.

(10:39) Do It Right or Risk Losing the Deduction
The importance of solid documentation, fair rates, and proper proof to defend the deduction in an audit.

Podcast Host:

Mike Jesowshek, CPA – Founder and Host of Small Business Tax Savings Podcast
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🎙 ABOUT THE PODCAST
The Small Business Tax Savings Podcast is your go-to resource for cutting-edge tax strategies to help entrepreneurs legally slash their tax bills. Hosted by Mike Jesowshek, CPA, this show breaks down complex tax topics into clear, no-fluff insights so you can keep more of your hard-earned money.