My mother is retired, she needs to rent part of the home to help with her expenses, as a daughter, can I report the rent income in my taxes if I open an LLC to not mix the income with my personal income from the property my retired mother owns.
if you have no ownership interest in the home the answer is no. Also, if you don't have an ownership interest, I strongly recommend that your mother not put you on the title. Eventually. you would likely inherit the property but not be entitled to a step-up on your portion which would likely result in a tax bill for you when sold.
If your mother rents out part of her home, and she is the only owner of the home, then the rental income is her income. Being her daughter doesn't make it your income. Forming an LLC doesn't make you or the LLC an owner of the home, and it doesn't make the income your income or the LLC's income. The rental income is still your mother's income, and she has to report it on her tax return.
Also note that a single-member LLC is disregarded for federal income tax purposes. In other words, as far as federal income tax is concerned, the LLC doesn't exist. You and your single-member LLC are one and the same. The LLC's income is your income. So it's not clear what would be accomplished by forming an LLC.
Why do you want to report your mother's rental income on your tax return? What are you trying to accomplish?
I would add one word to Mike9241's warning about adding you to the title. It could result in a huge tax bill for you.
Your mother reports the rental income/expenses on SCH E of her own tax return. More than likely, this will not generate any taxable income for her anyway. Generally (usually) when you add up the allowed and deductible rental expenses of mortgage interest, property taxes, and property insurance along with the depreciation, those four expenses alone usually exceed the total rental income received for the year, resulting in a loss "ON PAPER" at tax filing time.Add to that the additional allowed rental expenses of utilities, repair, maintenance, etc. and you're almost assured that you will show a loss each and every year the property/room/space is rented.
Typically, all depreciation taken is recaptured and taxed in the tax year you sell the property. But if she doesn't sell the property *and* you inherit the property upon her passing, two things happen.
1. the recipient of the inheritance gets a step-up in cost basis equal to the FMV of the property on the date of the owner's passing.
2. All prior depreciation already taken basically evaporates and "goes away" and nobody has to recapture and pay tax on that depreciation.
So there's no need for you to try to "get around" anything tax-wise, because there's really nothing to "get around" anyway.That is, assuming the house will never be sold or otherwise have any type of ownership change until after your mother passes.
If this is merely a cost sharing arrangement where the amount paid is below fair market rental, there would be no reportable income to your mom. 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.
Here’s what she may be required to do:
Report the income (enter at Rents & Royalties/Income & expenses from Rental Properties); and then deduct the expenses on schedule E. If the room mate has full run of the house, and there's just the 2 of them, then half your expenses are deductible (mortgage interest, property taxes, insurance, utilities, repairs, and depreciation [if needed}). Her net income will usually be less than zero.
What you are NOT allowed to do, because it is her 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.