Below Fair Market Rental Income - Do I need to claim as income?

Yes, you need to claim the income.  However, when you charge rental rates that are below fair market rates, you are not allowed to claim rental expenses or depreciation of that part of your home.  You will just report the income you received and claim any mortgage interest or property tax you paid on Schedule A Itemized Deductions just as you would if you were not renting part of your home.

Use the following steps to report the income from rent:

• Go to Federal > Income & Expenses
• Scroll down to Less Common Income
• Click Start or Update beside Miscellaneous Income, 1099-A, 1099-C
• Scroll down to Other reportable income and click Start or Update
• Answer Yes for the question Did you receive any other taxable income
• On the next screen, enter a description and the amount for your rent income