Tax reduction expert Murray Bradford claims small business owners may benefit from tax breaks related to business rent paid to a spouse.
"Most people are aware of the basic tax deductions available to them as married couples," said Mr. Bradford, whose expertise comes from 30 years in accounting, including a lengthy stay at Price Waterhouse. "But the less conventional tax deductions also available to married, self-employed individuals - such as the ability to write off business rent paid to a spouse - can be arcane."
He has written an article explaining how the IRS allows one spouse to claim rent as a business expense on his or her Schedule C when he or she pays that rent to the other spouse, who may in turn report the money as income. This deduction is available to spouses whether they file separately or jointly, observes his article, which goes on to note that small business owners and their spouses who use this strategy must treat the rent paid and received as if it comes from a third party: Payment must be for a fair-market value, as well as consistent, systematic and timely."Even though the transaction occurs between spouses, it is still a business activity," said Mr. Bradford. "Self-employed business owners who pay business rent to their spouses may deduct this as a legitimate business expense, but the necessity remains to document this accurately and adequately. As with any other deductible business expense, properly accounting the business rent paid to a spouse is essential in order to withstand IRS scrutiny in the event of an audit."
Mr. Bradford's article, "Pocket Self-Employment Taxes by Renting from Your Spouse," is available in the Tax Reduction Letter. To learn more, visit
