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Free spirit | If you own a place and get a roommate to help with mortgage? |
is that considered an extra income? If so, how do you write that in your taxes - business or just add as an regular income?
Silly question, but totally new to this topic. |
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The answer is 42.
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The people here are totally incorrect and can get you into tax trouble.
ARE YOU PEOPLE STUPID? If you want to cheat on your taxes that is your decision; however, telling others to do it is wrong.
ARE YOU PEOPLE EVEN MORE STUPID? To claim that you are doing it yourself it awfully stupid. The answers you have on this forum is admissible as evidence and the IRS can get a court order and serve Yahoo! to get your names! You people who claim to be cheaters not only owe back taxes but penalties as well. Are you people insane? If you want to cheat, that's your decision, but advertising it IN WRITING is just plain insane!
Okay, to answer your question:
If you were both "roommates" paying rent to another person or "landlord", then there is nothing to claim. The landlord does.
You said you are receiving money from from another person. That is a taxable event. Got that everyone? If you receive any money from anyone else, it is a taxable event. The only exceptions are (a) garage sales, up to twice a year, you do not need to claim the money you got for that; and (b) you can get a "gift" of up to $12,000 per year. That's it. Every other transaction is taxable. (Okay, okay, there are a few more exceptions but it does not apply here.)
Now, in the case you describe: you are the "landlord" and even though you call the person is a "roommate", they are still a "tenant".
Yes, you need to report it as income! See an accountant. (The accountant's fee can also be written off your taxes.) You can write off your utilities, cable, phone an anything else you share. Did the fridge break, that's a tax write-off to get it fixed (or get a new one). If the person is taking up 50% of the space, you can depreciate 50% of the house! You will probably actually make more money this way. Did your 13" color TV break and you had to get a 46" LCD 1080p HD-TV as a replacement? Does your tenant watch TV on it? Guess what, that's a tax write-off too! (Check with your accountant!)
The only caveat is that when you stop renting, you need to recapture depreciation so you would be hit by a hefty sum. Talk to your accountant.
As a "landlord", you get more deductions than these cheaters who don't claim their rental incomes. Too funny!
Talk to your accountant.
Talk to your accountant.
Don't even take my word for it!
Talk to your accountant.
Talk to your accountant.
And not H&R Block as someone else suggested. You need to get a CPA with the license to "practice before the IRS".
Just in case I did not make it clear, talk to your accountant. |
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specialonetoo
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There is a difference in having a 'roommate' and a 'tenant'. If they are a roommate, no you don't have to claim anything. As far as the government knows, you are living with someone. There is nothing on income tax forms that ask how much anyone pays in rent. Therefore, it is never reported. Now if you had a separate home that you rented out, yes, you would have to claim that as added income. But not with a roommate. There is a BIG difference. |
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sortaclarksville
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You are charging them rent, so they are a tenant and you are a landlord. Legally you are required to report it, but most homeowners doing a room-mate to help with the mortgage agreement don't. You have to report it on your taxes as a small business. However, what they pay you in rent can be offset by part of your actual mortgage costs as well as part of your utilities if they aren't paying for part of that.
One way to get around this is to NOT charge them rent, but have them pay 100% of the utilities instead (agree that they pay them up to a certain $ amount based on whatever you were originally going to charge as rent). Same amount of "income" for you, different situation, one taxable, one not, one a "business," one not. :) |
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rxing
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why would you tell the irs? |
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Elizabeth
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I wouldn't tell the IRS anything. I have never claimed income when I have had roommates. Not their business. |
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Expert Realtor
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Technically, yeah, it's extra income, but ask yourself this:
Has the IRS ever staked out you home to see who else was living there?
...and yes, I'm being silly, but it's the truth. It ranks up there with building contractors getting paid in cash....everyone knows they do it...everyone looks over it.
One of the posters above is a just a tad tax paranoid.
Don't sweat it.
PS: FAITH HIT THE NAIL ON THE HEAD. |
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despopolador10
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as long as there is no lease involved and nobody rats you out you should be fine not reporting it to the IRS, however, you renting a room is a business and you should report it to the IRS as rental real estate. I was new to this myself when I did my taxes at the beginning of the year. It is considered a business income, if you don't report it and the IRS does a audit on your taxes you could be in real trouble and might have to pay a big fine, plus that would be tax evasion. |
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prettygirl_80650
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if the IRS did snoop into your life as much as the previous person seems to think then you would be looking at fraud BUT because when you report taxes even with owning a home they don't need proof as to where the money for the mortgage comes from so you are safe in omitting that information to them |
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thickhtowngurl
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i wouldnt write that on my taxes.. |
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Marc
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It is either earned income from rent, or cash under the table for a discounted rate... if you get my drift! (Cash and money orders are great for that) |
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silverwingsdc
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most people do not claim it and here is why - it is your home and you are not taking depreciation for rental housing - if you did you would get lots of money back on your returns by the time you figured all the expenses - but if you are still nervous call the IRS.
remember if you were to claim the rent then you could - write off 1/2 the mortgage - 1/2 utilities - 1/2 taxes and 1/2 improvements and maintenance - something the irs most likely does not want to be a part of - who knows though - you may profit even more. |
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Unknown....
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There's a separate section for income from a rental property.
http://www.irs.gov/taxtopics/tc414.html
That's the page you'll want to read over. There's a way to also count depreciation of the portion rented against how much you have to pay in taxes. Good for you trying to go about it the legal way. Tax evasion penalties are incredibly high. All it takes is your renter being mad at you and they can just call and report you to the IRS as they can prove they gave you the money. |
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Intruder5
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The letter of the law-you have to report it.
You can, however offset that with expenses like half the utilities, etc., and in the end, you come out ahead because you claim the mortgage interest deduction. |
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crct2004
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Wow, an honest person, Kudos to you! Most people would not report it. If you want to do the legal thing call H&R Block or a place like that and ask them.
I have a friend who has a band and he did not report a few hundred dollars he made and the IRS came after him. |
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The Morg
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It depends if they claim you.
In some states you can get a deduction on your state taxes if you claim "rental credit".
The tenant has to put your information down to collect on rental credit.
In California we have rental credit. I have my roommate (who they would consider a tenant because she is renting a stand alone space with its own entry, bath and kitchette).
How do I get around it? I figured out that her rental credit is a little over $50. So I give her a $75 deduction in her rent every December for NOT claiming us. That $75 that I give her is better than the money I would have to fork out if I had to disclose her on my taxes and she comes out a little ahead by not claiming us.
If you have an arrangement with your tenant that is agreeable like that then you are fine. If not, then you need to claim her and take the hit.
P.S. I charge a flat fee without utilities. Looking back I wished I would have charged a % of utilities and less of a monthly rate. I think she uses her air conditioner too much and wastes energy that she might not waste if she was paying for a portion of it.
Oh, well. Her rent covers more than the utilities so I am still ahead no matter how you look at it. |
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gypsi k
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Not a silly question.There actually is a spot for claiming rent income. If this person isn't claiming a rent credit of any kind then you may not even have to report it at all. But then again it may be in your best interest if it gets you a credit. You can go to the library and look at all the different tax papers and figure out your return with the income and again without it to see what benefits you the most. |
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