Rental Income

Forum|Forum|6 years ago
February 19, 2020
2 replies
1 view

Client has an autistic adult son who collected $11K social security. Son paid parents $5,000 rent for the year 2019. Is this rental income?

ProSeries Professional

This topic has been closed for replies.

Best answer by BobKamman

How and why would the son claim payment of rent?

If the son is receiving SSI, he has to show he remains eligible. They know he received $11,000. Unless he spent it, his assets are too high. He has to show how it was spent. Also, if he is receiving income "in kind" -- free room and board -- that may disqualify him.

If the son is receiving Social Security and one of his parents is the "representative payee," as I explained earlier, they have to show what they did with his money. If they claim he paid rent, they might be asked to show they reported the income.

Tax preparers should know enough about helping poor people, even if they can't pay fees, in order to avoid giving bad advice to the rich relatives of poor people.

Camp1040

Level 10

If it is truly a rental arrangement and not just some shared expenses and chipping in for groceries, then yes .

hillsboro15269

Level 5

There's this special deal called "renting for less than FMV." I've seen it more for businesses renting to non-profits, although it also happens when family members rent to family members.

I haven't done one in Pro Series yet, but I'm guessing it's pretty straight-forward, once you figure out what you're doing.

Check out IRS Pub. 527 for more info. Happy Taxing 🙂

BobKamman

Level 15

Is it Social Security, or SSI? He may have to spend down what he receives, in order to continue payments. Non-FMV rent used to be reported as miscellaneous income. It still is. Deductions attributable to it used to be allowed on Schedule A. Now, they're not.

Maybe he could share the household food and utility costs, instead of calling it rent.

Camp1040

Level 10

I think the question is: Do the parents have to claim the income? Even if it were below FMV rental.

I don't believe the source of the income is in question, maybe the OP could provide more info.

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