Do I have to claim the money my boyfriend gives me for "rent", now that we're living together?

[jenstax215]

My boyfriend and I each own our own homes.  Now that we're ready to move in together, he's found some tenants and is renting his house and is moving in with me.  He will pay half of my $1600 mortgage, or $800.  Since he has to claim his tenants' rent as rental income, he wants to offset that by claiming the $800 "rent" he's paying me.  This means I will have to claim the $800 as my rental income.  But is this fair?  I understand I would have to do this if I was renting a room to someone, but I'm not renting to him, we are co-habitating and share a bed/bedroom.  I just want to do what's right and what's fair, we're not sure how the IRS views this situation?

[VolvoGirl]

He can not claim what he is paying you.  Not at all.  It is not a rental expense for his house.  It is just a personal expense for him and not deductible.   So no expense for him and no income for you.

[rjs]

. . . And cost-sharing when you're living together is not rent, even if you own the home. It's just personal household expenses.

[pk]

The above position is  because you are "sharing bed/bedroom" --- if you were to segregate an area of the house exclusively for his use, then you can charge him rent for the exclusive area that he rents  ( he does not get to deduct the rent paid , because that is personal expense but you get to declare  the rental  income and pay taxes on it ) --- just look upon this is sharing expenses and no deduction for him and no income for you --- the old "KISS" principle

[Hal_Al]

There are two NO answers there.

No, you do not declare the payments as income on your return. It is not income. It is roommates sharing expenses.

No, he cannot deduct those payments to offset the rental income he must claim on his tax return. That is not an expense related to the rental income.

If this situation is prompted  because you live in a state that grants a renters credit or deduction, on the state tax return (https://hotpads.com/blog/6-potential-tax-deductions-renters/), you will have to carefully review your state's rules to see if he qualifies (I doubt that he does)

[CR43]

Can you tell me what the IRS code is for this?  I'm being audited and they are counting the $400 a month given to me as a significant other as income.  I need to code to have them take that off my income.  Yes, my income is less than 40K but they are fishing for anything they can find even though I paid my taxes and filed as I should have.

[Hal_Al]

@CR43 

How did you get in this situation?  That is, how did the IRS find out about the $400/month?  Did your significant other (SO) claim that they paid rent in order to get some government benefit?  SO can't call it rent for one purpose and you call it not rent for another (income tax) purpose.  

You're probably not going to find the above rationale in the tax code.  If you want to fight this, you're probably going to need professional help.  Even if you give in to the IRS, you may want to have a professional prepare your amended return in order to get any available deductions.

[CR43]

No, my sig other did not claim these monies as expenses.  It's kind of a weird situation.  I did not file taxes in 2018 because my SS was just under $13,000 per year.  I did have a small LLC that operated at a loss that year so I asked one of my kids if they wanted me to put them on the LLC and claim the loss.  They did.  It made the small amount of income put them in a higher income bracket and the IRS audited them.  The agreement was that I would take the LLC "back" claim the income and file the taxes, which I did.  I had another 20K in income from my small business and I filed proper taxes on it.  They wanted me to prove my income so I provided them with the only thing I had with income on it and that was my bank statement.  There's nothing to hide, I paid them 900 in taxes but now they want me to go through the entire 2018 bank statement and justify every expense and every income.  I just feel that if they are picking on someone who made so little money, perhaps I should knock a little of the income off.  Originally, I just added all the deposits and put that down as income but as I go through my statement, I see that my significant other gave me approx 400 a month as part of the expenses for the household and I also loaned kids money and they repaid it over that year so that's not income either.  I'm hoping when I'm done, they will owe me.  The Bas*&%ds should pick on someone who makes enough to live on not some 76 year old who is still working and trying to make ends meet.  

[Critter-3]

Personally I would just pay up and be done with it  since you have been doing some unorthodox things (you cannot just flip flop who will claim LLC income belonging to you to others and back if you don't do it correctly)  and you probably did not keep a separate business bank account so when you gave them access to your personal bank account they determined that ALL deposits to that account was considered business income including the amount your OTHER gives you.   You may be able to fight this but at this point I believe it will have to be in court if they have made a final determination which means you need a tax attorney ASAP.  Read the notice they sent you carefully then make a decision or seek professional assistance.

[CR43]

The IRS has not made a final determination.  I'm trying to stay one step ahead of them by knowing the law.  If I don't claim the payment by my sig other, my income drops to below $25,000 and I have significant less taxes however, when I talked to the auditor last time, she said that because in that year 2018, I made less then the other 10 years (which I filed and paid taxes on approx 40k per year) they would not allow the $16,000 in expenses because she does not believe I'm a business but instead a hobby.  They have not made a final determination and I believe if I have proof that those expenses related to my LLC (which I do, they are vet bills and food bills), they cannot just disregard those expenses.  I believe there is a long standing rule about that called the Cohen Rule.  I believe this rule will cover my expenses in this instance.  The IRS has been auditing me since last July, calling me without appointments and trying to justify their audit.  If they took away the $16,000 in expenses that would mean I pay another $200 in taxes.  Is this really worthwhile to the IRS?  this is what is wrong with our system.  Now they are going to be opening an entire department to "catch" those people who sell odds and ends and earn small amounts of under the table income...reporting income above $600.  what a bunch of crap and does the IRS really think people will pay?  No they will build a better mousetrap.