My 19 yr old daughter has a disability and gets SSI. I am required to charge her rent. Do I have to claim that as income? And is it ok we still claim her as a dependent?

[DianeW]

For parents who charge room and board, this is income to the parents and must be reported annually on their income tax returns.  Once the money is received by the parents, it is their money to do with as they please and can be used toward household expenses.  

Whether you can claim her as a dependent depends on the whether you meet all the qualifications.  They are listed below for your convenience. 

• Rules for Claiming a Dependent on Your Tax Return (click the hyperlink)
  

Qualifying Child:

1. The child must be related to you. The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, adopted child or an offspring of any of them.
2. Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled.
3. Your child must live with you for more than half the year, but several exceptions apply (ie. away at school).
4. The child cannot provide more than half of his/her support.
5. You must be the only person claiming the child
6. The child must be a US citizen, resident alien, national, or resident of Mexico or Canada.
7. The child cannot file a joint return with his or her spouse. 
8. Click the image to enlarge and view the IRS chart.

If the amount of rent will leave you in a position of "Not for profit rental income" see details and how to report next.

https://ttlc.intuit.com/replies/5259953

[dianejoetompkins]

Is this still the case for 2022 tax returns?  I have one mom telling me you need to claim the income and another one saying you don't.

[Vanessa A]

Yes, the answer @DianeW gave above is still the case for 2022.  The rules for claiming rental income has not changed even if the rent is received from a dependent. You will need to report the rent your daughter pays you as rental income. 

Using TurboTax Premier, Home and Business or Self-Employed, you will follow the steps in this link to enter the rental income. 

[dianejoetompkins]

Thanks for verifying that for me.  I will pass it along to my friends in the same situation.  

[lilmisscrzygrl]

Are the rules the same if you aren't charging fair market value?

[DianeW777]

Yes, they are the same.  You can enter the rental income to offset it by the expenses or you can simply enter the rent as 'other income' however no expenses would be allowed to offset it if you choose the latter.  If you claim your child as a dependent be sure you qualify to do that since there is SSI involved which belongs to your child.

• Who can I claim as a dependent?

See the answer posted for your other question below.

If your son is simply reimbursing you for his expenses such as utilities, laundry, food, etc., then this is not rent. 

Rent is considered income, however, in your situation you would be allowed to deduct expenses attributable to the rental income which would zero it out per your initial discussion.  Since you are not renting for a profit, then you would be limited on the deduction of expenses to the amount of rent received.  This means there would be no excess deductions allowed to offset other income on your return. Expenses are limited to the amount of rent received.

How do I know you are not renting for a profit?  At the rate of $300 per month it's highly unlikely that would be considered fair rental value in your area when comparing to a similar situation. Any rent charged that is below fair rental value in the area where you are is considered a 'not for profit rental'.

• IRS Publication 527 (see page 16).

If you want to report it as rent and report the expenses you pay with it you can do that to show no profit or loss.

• Where do I report rental income and expense in TurboTax?

@lilmisscrzygrl 

[derwishj]

My daughter is getting SSI and I charge her $200 for a room which is substantially lower than Fair Rental Amount. I cannot consider it as rental income. Can I treat it as "cost-sharing" towards paying property taxes, HOA, home insurance etc. 

[MayaD]

Yes. Since you are charging her below the fair market amount and you are not trying to make a profit, you can consider it cost sharing and you don't report it as income.