Actually, a security deposit is not "your" money. It belongs to the tenant and the landlord holds it in escrow. It is not included as income for the landlord since legally speaking the landlord is just holding it "on behalf of the tenant" and a security deposit. While the landlord retains control of said deposit, the landlord has no legal claim to it until such circumstances arise that legally entitle the landlord to it.
For example, tenant's early termination of lease, or damages the tenant is responsible for, yet does not pay for.
Upon termination of the lease, if the landlord returns the security deposit to the tenant then nothing concerning said deposit is reported anywhere. However, if the landlord retains all or part of the deposit for any reason upon lease termination, then it's reported as rental income in the tax year the landlord lays claim to the deposit and if challenged on the legal front, retains what they claim.
Generally landlord claims to a security deposit (or portion of it) is for damages the tenant was responsible for, yet did not pay for. So the taxability of the amount of the deposit claimed and reported as rental income is offset by the cost of the damages it is used to pay for.
