All income and expenses from a rental property should be reported the IRS. Most of the time that is on Form 1040, Schedule E. Deductions are not limited but because rental income is considered passive losses are limited (not lost however).
If this is something that has been ongoing you should continue to report it as it was before. If it is new it needs to be set up properly. Either way, the best way to handle your situation is to sit down with someone face to face to discuss it.
