Room Mates Using Venmo To Split Housing costs.

[elijahlewis]

I recently purchased a house and have two room mates that are splitting the costs of living with me. This includes the mortgage (PI&TI) and utilities. They are leaning towards wanting to use a cash app like Venmo to send me the money for their share. Will I receive a 1099-K form for this due to the new American Rescue Plan that started just this year? Also, will I have to report what they pay as income since it is passing through my account? I am not MAKING any income from them at all and the amount they are paying is lower than the average rent in my area. Again, I am making 0$ from them and it is all going to the mortgage and utilities. 

Thanks for any input! 

[josshapiro]

See the discussion below, it would appear you do have to report the rental income and unfortunately go through the hassle of filling out the extra schedules, but the good news is you would be able to offset that with the house expenses associated with the "renters" (ie: mortgage interest, property taxes, utilities, repairs, ...) which based on your description would more than likely offset the rental income and would result in a net no impact to your taxes.

Do I have to claim income from renting a room in my primary residence if I'm not making any money co...

[DianeW777]

If you are charging rent for space in your home, and it is at or above fair rental value (FRV), then you must include this income on your tax return as rental income on Schedule E.

If  you rent it at less than FRV then the income is still reportable and taxable, however it is reported differently.  See the information from IRS Publication 527.

• Not Rented for Profit

  If you don’t rent your property to make a profit, you can’t deduct rental expenses in excess of the amount of your rental income. You can’t deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.

  • Where to report.  Report your not-for-profit rental income on Schedule 1 (Form 1040), line 8. If you itemize your deductions, include your mortgage interest and mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.

Essentially the expenses are allowed as itemized deductions if you use this.  If not, you would use the standard deduction and the rental income must still be included.