Regarding your rental income -
Unless you
consider this monthly payment amount as a gift from your sister (the
annual gift exclusion amount allows anyone to gift another person up to
$14,000 in a single year tax-free), you will need to recognize this income as
other income on your tax return (even though you will not be able to claim
any rental expenses against this income.)
If your rental
income is less than the FMV of rent that should be charged for the property
(based on various factors including location and house size) or if you are
collecting rent on personal use property (like your car), you will need to
recognize this income as other income on your tax return (even though you
will not be able to claim any rental expenses against this income.) This type
of rental income will be reported on line 21 of your 1040.
To enter this as other income under other
miscellaneous income in TurboTax Online and Desktop (for
TurboTax Online sign-in, click Here:(
- Click on the “Federal Taxes”
tab ("Personal" tab in TurboTax Home & Business)
- Next click on “Wages and
Income”
- Next click on "jump to
full list" or “I’ll choose what I work on” (or see more income)
- Scroll down the screen until
to come to the section “Less Common Income”
- Choose "show more",
then Miscellaneous Income
- Choose "Other Reportable
Income" and enter this information here under other taxable
income (screenshot)
Regarding your rental expenses -
Since you are
renting for less than the FMV, you will not be able to claim any rental
expenses under the rental section. However, you will be able to claim any
mortgage interest, mortgage insurance and property taxes on this rental
property as though it were a second home.
To enter
your Mortgage Interest and insurance in TurboTax Online (for
TurboTax Online sign-in, click Here
, then select "Take Me to My Return") or Desktop, please follow these
steps:
- Once you are in your tax
return, click on the “Federal Taxes” tab ("Personal" tab in
TurboTax Home & Business)
- Next click on “Deductions and
credits”
- Next click on "jump to
full list" or “I’ll choose what I work on”
- Scroll down the screen until
to come to the section “Your Home”
- Choose "show more",
then Mortgage Interest, Refinancing and Insurance and follow the onscreen
instructions.
- Select "add a
lender" and input your information here
To enter
your Property Taxes in TurboTax Online or Desktop, please follow
these steps:
- Once you are in your tax
return, click on the “Federal Taxes” tab ("Personal" tab in
TurboTax Home & Business)
- Next click on “Deductions and
credits”
- Next click on "jump to
full list" or “I’ll choose what I work on”
- Scroll down the screen until
to come to the section “Your Home”
- Choose "show more",
then Property Taxes and follow the onscreen instructions
- Enter the property taxes
under "Other Properties"
