Are shared living expense reimbursements taxable?

[Carl]

In a nutshell, what you have is nothing more than a cost sharing arrangement. So there is absolutely nothing what-so-ever that needs to be reported on any tax return. Especially since the shared amount will be less than $15K in any one tax year.

You are creating unnecessary paperwork that "could" result in an audit years after you file, that could quite easily turn into that never-ending nightmare with the IRS from which you never awaken.

Since this room mate is the GF, this is 100% personal use, as I seriously doubt the occupants sleep in separate rooms and have their own separately designated "personal use" rooms/areas in the property.

[Hal_Al]

@Auser2  said"

  What if I’m self-employed, I want to write utilities off for myself, I reimburse the person I’m living with for the expense- do they then have to count it as income? Would it be different if I paid the bills directly? 

First, in order to take the home office deduction, you must have a space that  is used 'Regularly and Exclusively'  for business.  Then you would need to identify those expenses attributable to that use.  The usual method is percentage of space.  If you able to meet the regular and exclusive rules, and able to calculate your business use percentage, your roommate  would not have to declare any any income just because you are able to claim a portion your (normally) personal expenses as a business  deduction.

It would not be different if you paid the bills directly.  You still need to be able to reasonably calculate your business use.  

 Instead of all that detailed calculation: Filers can now determine their allowable home office deduction by multiplying the square footage of the portion of their residence allocated for business purposes  (regular & exclusive space) by $5.00 up to a maximum 300 square feet ($1,500) for the taxable year starting January 1, 2013; the simplified rule.  http://www.inc.com/samuel-wagreich/an-easier-way-to-do-2013-home-office-tax-deductions.html

[Redb1hound]

One of my roommates sharing expenses with me was in the hospital for a week and her company she works for

wants me to fill out a W-9 form from the IRS with my SSN and Certification Status before the cut her a financial relief check. Not sure what this form will show her company? What should/should not do? Thanks in advance.

[Hal_Al]

Her company is, most likely, planning on issuing you a 1099-MISC, for the "rent" they will be paying you. An IRS form means you're on the IRS's radar.  You may have to report the income. 

[Vanessa A]

An I9 or a W-9?  A W-9 is for businesses to give their tax information to someone who will be paying them.  An I9, proves your legal status in the US. 

[nylalou]

Hello, 

I was just told by NY state that even though I share my apartment (part time) with a roommate, they see it as a sublet and I must file a federal and state tax return for every year their funds passed through my account to pay the landlord. What facts do I need to present to disprove this? 

Thanks! 

[Hal_Al]

@nylalou  What is your situation, that you need to disprove that?  Are you being audited? Did your roommate try to claim the state rent credit? That's the problem, he can't claim the credit, if he didn't pay "rent".  You may need professional help.

[nylalou]

No, roommate did not try to claim state rent credit.

More of an audit: I am need to prove that any shared expenses (rent, utilities, repairs, maintenance, cleaning, etc) I receive from my roommate, into my account, are not income, and do not require tax filing in that state. 

I was told since the person deposits rent money into my account, it is a sublet, and therefore I am required to claim any funds that pass-through my account as income. How can that be if those funds are going directly to a landlord? 

A sublet from what I understand is defined as granting full access only to the sub-letter, not also to still reside in the same space. 

This is not income to me, it is rent being deposited and paid out shortly thereafter, for a shared apartment that I must submit the entire rent for as the single lease holder. (It is not mandatory for my roommate to be added to the lease). 

[Carl]

Your situation is more of a legal one, than it is a tax question. You should seek legal advice from qualified legal counsel in your state.

[nylalou]

@Carl Hi, thanks for the input, how is it a legal issue? VS a tax question of wether or not a shared expenses with a roommate need to be declared as income? 

In an earlier reply you wrote: 
July 31, 2021 9:29 AM

"In a nutshell, what you have is nothing more than a cost sharing arrangement. So there is absolutely nothing what-so-ever that needs to be reported on any tax return." 

Wouldn't my situation be the exact same here? 

[Carl]

It's a legal issue because you question the state taxing authority's treatment of the income at the state level under state tax laws. If you don't agree, there's not anything anyone here can do to defend you against the state. Only qualified legal counsel that is licensed to practice in the state can do that.

Your other option is to seek the services of the Tax Advocate in your state, if your state offers such a service. The IRS does for federal taxes. Not for state taxes. From what I see, New York does offer such a service, which you can learn about at https://www.tax.ny.gov/tra/

[Anonymous_]

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@nylalou wrote:

A sublet from what I understand is defined as granting full access only to the sub-letter, not also to still reside in the same space. 

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A tenant can sublet all or part of the demised premises (typically, doing so requires the permission of the landlord).

Regardless, if the state is going to take the position that the payments to you constitute rental income, there is not much you can do about it beyond looking for, and documenting, as many deductions as possible, such as utilities, cleaning/maintenance, repairs, et al. 

@nylalou 

[Hal_Al]

How did the state "get on to you"? Roommates  sharing the rent, with only one on the lease, is very common.  

[perklabs]

With the new $10K bank reporting law "in and out" of your bank account, I am concerned that my shared living expenses with my GF would be a flag. She deposits monthly payments into my account that exceeds this 10K a year threshold to cover 1/2 of the expenses including rent and utilities and other expenses that I then pay out of my account or credit card to gain points etc. Should I be concerned that the IRS will audit me because I have more than the 10K coming into my account a year that is not otherwise reported? I have additional moneys from my mom that would put even more unreported money into my account. I put every thing on my credit card and she pays me back. This new tax law has me concerned and I would like to avoid an audit. Any suggestions? 

[NCperson]

@perklabs - personally, I would not worry about it.  In the HIGHLY unlikely scenario that you are asked by the IRS, you will have good records to prove that this was a mutual living situation.    Frankly, the IRS has more things to worry about that items such as this - they remain understaffed. 

can you provide a link to what you are referring to? I wasn't aware that the federal goverenment moved ahead with this proposal.  Certainly a single deposit of $10,000 is reported by the banks and that has gone on for years.