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Visitor II

If I pay my aunt rent, does she need to claim it as income on her return?

The rent would just cover 1/3 of the utilities, some of the homeowners association fees, and a little bit more for maintenance and repairs. She wouldn’t be profiting at all and there would be no net gain/zero income.

There was another concern my aunt had as well. My cousin (aunt’s daughter)moved back in with her after college. However, because my cousin was making $25/hr or so, my aunt ended up losing around $1000 when she filed her taxes...why is that? Is household income factored into the head of the household taxes (my aunts)?
1 Comment
Catalyst V

If I pay my aunt rent, does she need to claim it as income on her return?

Your post is vague, and appears to be about two unrelated subjects. Rental income, and dependents. (Daughter moved back in, and cousin makes $25/hr - how do the two relate to taxes, if they relate at all?)

Did she rent out an entire home? Or was she just renting out a room in her primary residence?

"head of household taxes (my aunts)?"

So your aunt has a dependent that qualifies her to file HOH?

Deal with the rent stuff first.

" She wouldn’t be profiting at all"

I doubt that. The major deductions here (but not only deductions) for rental property is property insurance, property taxes and mortgage interest. The principle part of the mortgage payment is never deductible and is taxable income to the owner. But this is usually offset by the depreciation that the property owner is legally required to take. So lets deal with the rental only for now.

 - Was the entire property rented out? Or only part of her primary residence?
 - Was it rented to a related party that is related to your aunt? If so, what's the relationship here?

 - You mention being rented at below FMRV. How are you determining that it's rented below it's fair market rental value? That matters, because that figure is *highly* subjective and most incorrectly assume they are renting below FMRV when it fact, they are not.