Most business owners know the basics when it comes to tax deductions.They track meals, log mileage, and maybe max out a SEP IRA if they’re feeling fancy. But when it comes to tax planning that actually builds wealth, most entrepreneurs are still leaving thousands on the table—every single year.
In this post, we’re going to show you three powerful, IRS-approved strategies that you can implement right now—no loopholes, no gray areas, no sketchy tax gymnastics.
Just smart ownership and a willingness to think differently.
Let’s break down:
- The Augusta Rule
- The strategy to hire your kids
- How to cover tuition for your kids with business income—without the tax hit
- The underused gift-leaseback move
The Augusta Rule: Get Paid for Hosting Your Own Business Events
Yes, you can rent your own house… to your business.
And if done correctly, the IRS will let you:
- Deduct the rent as a business expense, and
- Not pay a dime of personal income tax on it
This is called the Augusta Rule, named after the city in Georgia where homeowners rent out their houses during the Masters golf tournament.
How It Works:
- You can rent your primary residence to your business for up to 14 days per year
- The business deducts the rent as an expense
- Under Section 280A(g), as long as you stay under the 15-day threshold, you do not need to report that rental income on your personal return.
It’s a clean, legal way to shift money from your business to you, without paying tax.
What Makes It Legit:
- The rent must be at fair market value (get local comps)
- The purpose must be a legitimate business use—think:
- Strategic planning meetings
- Team retreats
- Client dinners
- Workshop hosting
You need documentation: agenda, photos, calendar invite, the works
Example: If fair market rent is $1,000/day, and you rent your home for 14 days a year, that’s a $14,000 tax deduction for your business—and $0 in taxable income for you personally.
Hire Your Kids: Build Wealth and Save on Taxes as a Family
If your kids are old enough to use a smartphone, they’re old enough to help you in the business. And if they’re helping out? You should be paying them. Legitimately.
The IRS allows business owners to employ their children, and when done right, this is one of the most elegant tax planning moves available.
How It Works:
- Children can be paid a reasonable wage for real work
- That wage is deductible to your business
- If their income is under the standard deduction (around $14,000 in 2025), they pay no federal income tax
- And if your business is a sole prop or single-member LLC, you don’t even have to withhold Social Security or Medicare tax on those wages.
What They Can Do:
- Social media content
- Video editing
- Filing and scanning
- Event setup
- Voiceovers or modeling for brand assets
- Administrative work
Bonus Strategy: Pay them and open a Roth IRA in their name.
They get tax-free growth on that income for life—and you’ve just started their retirement plan at age 12.
Documentation Tips:
Track hours, pay fair wages, create a simple employment agreement. Keep everything above-board and business-like. Treat them like any other employee—with W-2s and timesheets.
Covering Your Kids’ Tuition—Through Your Business (Yes, Really)
What if we told you that if you decided to hire your child as I suggested earlier, you may also be able to pay for some of your children’s college tuition, and make it a business expense?
It’s possible. But here’s the key: you have to make the child an employee of the business first.
How It Works:
- Your child works in the business (just like in the “Hire Your Kids” strategy)
- You pay them a reasonable wage for that work
- You reimburse your child for tuition paid for credits that enhance their skills related to the work they do in the company.
- You get a business deduction, and the reimbursement is tax-free to your child.
Even though the business can’t directly write a tuition check as a deductible expense, this method creates the same result indirectly—and legally.
Why It’s Powerful:
- You turn after-tax dollars into pre-tax dollars
- Your child learns financial responsibility (and gets real-world work experience)
If you’re already planning to cover tuition from personal income, this strategy just lets you do it smarter
The Gift-Leaseback: Turn Your Personal Stuff into a Business Deduction
This is one of the most clever “wealth transfer” strategies few entrepreneurs know about.
How It Works:
- You personally own an item that your business uses—a desk, camera, laptop, furniture, even workout equipment in a business-branded studio.
- Over time, you depreciated the items. Their cost basis is $0, which doesn’t provide you with any more.
- Instead of letting your business use it for free, you gift the item to a family member (often your child or a dependent in a lower tax bracket)… and then your business leases it back.
- The lease payments are a deduction on your business.
- It is income to your child or dependent, but normally at a much lower tax bracket than yours.
Why It’s Powerful?
A legitimate deduction for your business, income shifted to a lower-bracket household member, and full IRS compliance.
What to Keep in Mind:
- The asset should be real and needed by the business
- Lease terms must be reasonable and documented
- The recipient should report the rental income (it’s still taxable—just at a lower rate)
Example: You own a $5,000 camera. You gift it to your daughter, and your business leases it from her for $2,000/year. You deduct $2,000. She reports $2,000 of income—at a 10% bracket instead of your 35%.
Conclusion:
Real Tax Strategy Isn’t Just for Big Corporations. These four strategies aren’t loopholes. They’re intentional design choices built into the tax code to benefit business owners who take the time to plan.
- You’re allowed to rent your home.
- You’re allowed to employ your kids.
- You’re allowed to reimburse your employees for qualified tuition (including your kid).
- You’re allowed to shift income smartly and legally.
And when you use these strategies together, they don’t just reduce your taxes.
- They increase your control.
- Control over how and when you get paid.
- Control over how your wealth grows.
- Control over how much of your hard-earned money stays in your ecosystem.
You’ve already put in the hard work to generate profit.
Now it’s time to make sure you’re keeping more of it—with strategy, not stress.
IMPORTANT DISCLOSURES:
Educational use Only. The market insight published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature, or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as a solicitation to effect or attempt to effect transactions in securities or the rendering of personalized investment advice for compensation.
Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material does not suggest a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal, or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway Financial Group is a licensed attorney, and the information contained herein should not be considered legal advice.
