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Augusta Rule and SEC 280A(G) Exclusion

Hi - I rent my home out 12 times/yr to a business for them to have monthly company meetings.  As part of that - they sent me a 1099-NEC.  Where do I record that in Turbotax and also where do I record the Augusta rule SEC 280A(G) Exclusion?  This is the only thing I rent my home out for - so no other expenses or income from this.

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4 Replies
PatriciaV
Employee Tax Expert

Augusta Rule and SEC 280A(G) Exclusion

You are not required to report this rental income, per IRS Pub 527 Used as a home but rented less than 15 days:

 

If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function isn’t considered to be rental and it shouldn’t be reported on Schedule E (Form 1040). You aren’t required to report the rental income and rental expenses from this activity. Any expenses related to the home, such as mortgage interest, property taxes, and any qualified casualty loss, will be reported as normally allowed on Schedule A (Form 1040). See the Instructions for Schedule A for more information on deducting these expenses.

 

Be sure you have documentation for the purpose of the payments and the reason for excluding the income (including the IRS reference) should the IRS have questions.

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Augusta Rule and SEC 280A(G) Exclusion

How about the 1099-NEC that I received. Where do I report that?

Augusta Rule and SEC 280A(G) Exclusion

You should ask them to file an amended 1099-NEC (reporting zero) as that should not have been filed.

That form is for performing services; of which you did not provide.

They should have technically filed form 1099-MISC.

If they won't file an amended form, then report it on Schedule C to avoid a matching notice.

Then reflect an expense for the same amount and reference Code Section 280A exclusion.  This will net you to zero.

If they do amend, and then file the 1099-MISC, just report this on Schedule E, to avoid the matching notice, and then once again an expense to offset it and reference as above.

Just know, that this may cause a red flag along with a letter from the IRS.  Just make sure that you have sufficient documentation to support the once a month rental; hopefully you have a written agreement.  The IRS will want to have support that you do in fact meet the exclusion rule.

 

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
eadove
Returning Member

Augusta Rule and SEC 280A(G) Exclusion

This may be true for Federal, but it is not true for states. For example, in Virginia, we have to report AirBnB income, and because the program will not allow me to file my federal with a schedule E under the 280A(g) rule, I have to print and send everything in. It is very frustrating. FYI, H&R Block's program will let you file federal with the schedule E 280A(g) exemption so that you can appropriately file your state taxes.

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