I’m married with 3 children, we get free rent and utilities plus 500$ a month. Should we file?

[Opus 17]

Who pays your rent and additional money and why?

[jazzyjohnson209]

We work in exchange for free rent and utilities plus get paid 500$ a month from a relative.

[Opus 17]

Gifts from a relative or not taxable.

[Opus 17]

Gifts from a relative or not taxable.

Generally, anything that you receive as a result of providing services or goods to someone else is considered taxable income from working. This would include free rent. However there are some exceptions. Are you an on-site property manager, living in an apartment provided by the landlord so that you can perform maintenance and repairs? If not, what work are you doing to get free rent?

[jazzyjohnson209]

Basically all of that. We do maintenance. She owns 1600 acres that we help manage. Animals to maintain. 

[Opus 17]

This is what the IRS says.  

This is what the IRS says

Meals and Lodging

You don't include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met.

1. The meals are:

   1. Furnished on the business premises of your employer, and

   2. Furnished for the convenience of your employer.

2. The lodging is:

   1. Furnished on the business premises of your employer,

   2. Furnished for the convenience of your employer, and

   3. A condition of your employment. (You must accept it in order to be able to properly perform your duties.)

It wasn’t clear to me who was providing what benefits in your question. If you are living with a relative who is providing free room and board and additional cash, that can just be treated as a family gift and gifts are not taxable.

If you are getting cash from a relative, and living free with an unrelated person in exchange for performing work for them, then the gift from the relative is not taxable and the free room and board is not taxable if you meet the conditions from the IRS. Basically, this is a job that requires you to work at a specific place and live in a specific place in order to perform the job.

or, if you are living with the relative and getting cash from the relative but the relative wants to consider it a job rather than a gift, then it is still not taxable under those IRS rules.  (The difference being, if the relative is filing a business tax return, they may be able to deduct the value of your housing as a business expense if it is considered a job and you are providing services for the business.  This affects your relatives’s tax returns, it does not affect your tax return.)