Are shared living expense reimbursements taxable?

Forum|Forum|7 years ago
June 1, 2019
5 replies
0 views

My girlfriend moved into my house with me. We are going to split expenses down the middle. All bills/utilities are in my name, so she's going to be giving me upwards of $10K/yr. Is that taxable income? Is there some smart way to organize this? I've done a fair amount of googling and I don't see a definitive answer, some people say it's taxable if it's fair market value rent, but then you can depreciate part of the home (reducing cost basis?), others say it's something more like a reimbursement.

TurboTax Deluxe Online

Hal_Al

Employee

You are NOT REQUIRED, by the IRS, to treat that as reportable income. It is only roommates sharing expenses.

The alternate question is MAY you treat it as income. The answer is not as clear, but, in my opinion, is still NO. The only income types it could be is either rent or boarding house income. From how you described the financial arrangement and the personal nature of the relationship, it is pretty clearly neither.

Even if you were to try to call it rent, be advised that you cannot claim a loss from this activity, to offset other income. Because of the "personal use rule" (because it is your home, you have "personal use"), your deductions are limited to your income. Net effect ZERO.

N

nylalou

Hello,

I was just told by NY state that even though I share my apartment (part time) with a roommate, they see it as a sublet and I must file a federal and state tax return for every year their funds passed through my account to pay the landlord. What facts do I need to present to disprove this?

Thanks!

Hal_Al

Employee

@nylalou What is your situation, that you need to disprove that? Are you being audited? Did your roommate try to claim the state rent credit? That's the problem, he can't claim the credit, if he didn't pay "rent". You may need professional help.

DoninGA

Employee

If you are not renting a portion of the home to your girlfriend, then you are room-mates sharing expenses for the home. The expenses received from her are not income. If you are not renting a portion of the home, then there is no depreciation.

S

SweetieJean

Employee

Likewise, she cannot deduct the $10k.

A

Auser2

What if I’m self-employed, I want to write utilities off for myself, I reimburse the person I’m living with for the expense- do they then have to count it as income? Would it be different if I paid the bills directly?

Hal_Al

Employee

@Auser2 said"

What if I’m self-employed, I want to write utilities off for myself, I reimburse the person I’m living with for the expense- do they then have to count it as income? Would it be different if I paid the bills directly?

First, in order to take the home office deduction, you must have a space that is used 'Regularly and Exclusively' for business. Then you would need to identify those expenses attributable to that use. The usual method is percentage of space. If you able to meet the regular and exclusive rules, and able to calculate your business use percentage, your roommate would not have to declare any any income just because you are able to claim a portion your (normally) personal expenses as a business deduction.

It would not be different if you paid the bills directly. You still need to be able to reasonably calculate your business use.

Instead of all that detailed calculation: Filers can now determine their allowable home office deduction by multiplying the square footage of the portion of their residence allocated for business purposes (regular & exclusive space) by $5.00 up to a maximum 300 square feet ($1,500) for the taxable year starting January 1, 2013; the simplified rule. http://www.inc.com/samuel-wagreich/an-easier-way-to-do-2013-home-office-tax-deductions.html

Carl11_2

Employee

In a nutshell, what you have is nothing more than a cost sharing arrangement. So there is absolutely nothing what-so-ever that needs to be reported on any tax return. Especially since the shared amount will be less than $15K in any one tax year.

You are creating unnecessary paperwork that "could" result in an audit years after you file, that could quite easily turn into that never-ending nightmare with the IRS from which you never awaken.

Since this room mate is the GF, this is 100% personal use, as I seriously doubt the occupants sleep in separate rooms and have their own separately designated "personal use" rooms/areas in the property.

R

Redb1hound

One of my roommates sharing expenses with me was in the hospital for a week and her company she works for

wants me to fill out a W-9 form from the IRS with my SSN and Certification Status before the cut her a financial relief check. Not sure what this form will show her company? What should/should not do? Thanks in advance.

Hal_Al

Employee

Her company is, most likely, planning on issuing you a 1099-MISC, for the "rent" they will be paying you. An IRS form means you're on the IRS's radar. You may have to report the income.