I am the owner of a home, and I rent out two rooms from my house. How should I report this source of income? I work a desk job during the day as my main source of income.

The rental income is the total amount you receive from all sources for the rental. When you enter the information into the program you will enter under income the total amount you received for the rental. You will also be asked later in the program to enter in all the expenses (including mortgage interest for the property. This will reduce your rental income and properly calculate the profit/loss of the rental.   

To enter in your rental information, please follow the steps below:

1. Login to your TurboTax Account

2. Click Continue your return if you have already started a return.

 3. Click on Go to Federal Taxes heading 

4.  Click on wages and income (you can either Choose Jump to Full List -or I'll choose what I work on) 

5. Scroll way down to Rentals and Royalties- click on start or update 

6. Follow the interview questions and answer accordingly, you will eventually get to a screen that will say 'Let Us Enter Your Rental Info for You' (check the last circle to enter my rental info myself) 

7. Rental Income - click Start or Update- complete this section 

8. Expenses - click Start or Update- complete this section 

9. Assets/Depreciation - click Start or Update- complete this section 

10. Vehicle Expenses - click Start or Update- complete this section Remember you will need to enter in the total rent you received for the year, then you will enter in your expenses (i.e. mortgage interest, repairs, property tax, etc...) 

You are only able to deduct the mortgage interest, not the principal. When you depreciate the cost of the rental, that will take care of the principal part. 

Roommate rental. If this is merely a cost sharing arrangement where the amount paid is below fair market rental, there would be no reportable income to you. If the “rent” amount is fair market value, or more, there is still some question as to whether you even have to report it, as it almost always comes out zero. Most people take the attitude that it is not income; it's just room mates sharing expenses and ignore it. Family, as opposed to unrelated roommates, makes that position stronger.

Here’s what you may be required to do: Report the income (enter at Rents & Royalties/Income & expenses from Rental Properties); and then deduct the expenses on schedule E. If the room mate has full run of the house, and there's just the 2 of you, then half your expenses are deductible (mortgage interest, property taxes, insurance, utilities, repairs, and depreciation [if needed}). Your net income will usually be less than zero.

What you are NOT allowed to do, because it is your own home (you have "personal use") is claim a loss from this activity, to offset other income. Because of the "personal use rule", your deductions are limited to your income. Net effect ZERO.