Hi, how do I report income received from someone r...
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Hi, how do I report income received from someone renting a room in my home? I am self- employed.

 
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Level 15

Hi, how do I report income received from someone renting a room in my home? I am self- employed.

Income received for renting out real estate has nothing to do with your separate self-employment. All rental income and expenses are reported on SCH E as a physical part of your personal 1040 tax return.

In the version of TurboTax you are using (online self-employed) after you finish working through the SCH C section for your self-employment income, the next section is for Rental & Royalty Income & Expenses (SCH E). So you'll work it through there. A few things to point out since you're renting out a part of your primary residence.

- PAY ATTENTION TO DETAIL! The small print on each and every screen matters, big time.

- The in service date is the first day a renter *could* have moved in.

- The business use percentage of that portion of your home you are renting out is ONE HUNDRED PERCENT BUSINESSS USE.

 - The personal use percentage of that portion of your home you are renting out is ZERO PERCENT PERSONAL USE.

 - For the splits of the mortgage interest and property taxes, let the program do those splits for you. If you do that, then the program will apply that amount of your interest and property taxes for the rental portion, to the SCH E, and the amount for the personal use portion to the SCH A. The program will do this *FOR* *YOU* if you elect that option.

When working through expenses, the program will ask you for two types of expenses. You will be asked for "whole house" expenses for which it is most common you have have amounts to enter for those expenses. You will also be asked for "rental portion only" expenses. It is *NOT* common to have rental only expenses when renting a room in your house. So I would fully expect all of those expense values to be ZERO.

 

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Level 15

Hi, how do I report income received from someone renting a room in my home? I am self- employed.

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.

 

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.

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