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  1. #1
    Join Date
    Jul 2012
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    5

    Default How to Claim Roommate Income on Taxes

    I've had a roommate for many many years for a house I own. I just recently realized I need to claim rental income on my taxes. I did not realize that I need to claim income until my last roomate retaliated from a disagreement and told me he's reporting me to the IRS, and I researched and discovered roommate income is taxable. How many years must I go back in time to amend my previous returns?

  2. #2
    Join Date
    Sep 2010
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    19,248

    Default Re: How to Claim Roommate Income on Taxes

    Quote Quoting draca
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    I've had a roommate for many many years for a house I own. I just recently realized I need to claim rental income on my taxes. I did not realize that I need to claim income until my last roomate retaliated from a disagreement and told me he's reporting me to the IRS, and I researched and discovered roommate income is taxable. How many years must I go back in time to amend my previous returns?
    If you filed returns for those years, you can go back and amend them for the three years prior to the current year due. You not only report the income, but you can apportion certain other expenses. See IRS pub 527: https://www.irs.gov/publications/p527

  3. #3
    Join Date
    Oct 2014
    Posts
    7,426

    Default Re: How to Claim Roommate Income on Taxes

    Quote Quoting draca
    View Post
    I've had a roommate for many many years for a house I own. I just recently realized I need to claim rental income on my taxes. I did not realize that I need to claim income until my last roomate retaliated from a disagreement and told me he's reporting me to the IRS, and I researched and discovered roommate income is taxable. How many years must I go back in time to amend my previous returns?
    At least the last three years. The statute of limitations for the IRS to assess additional tax on your return is generally 3 years from the later of (1) the due date of the return (including any extensions) or (2) the date you actually filed the return. So if you have been filing returns on time, the IRS can right hit you for the years 2015 (if you had a extension to October 15), 2016, 2017, and 2018. If the omitted income is more than 25% of your total income for the year, then the IRS has 6 years to assess the tax, so if your rental income was more than 25% of your total income you may need to go back 6 years. See IRS Publication 527 for information on the taxation of rental property for information on the various deductions you can take for expenses you had with the rental.

    Finally, bear in mind if the IRS can show that you committed fraud on the return there is no SOL. And of course, the IRS can prosecute for tax fraud in that case, too, though that's more rare. Amending the returns for the years that are still open for assessment (3 or 6 years, as the case may be) can help prove you didn't have fraudulent intent.

  4. #4
    Join Date
    Oct 2006
    Posts
    15,660

    Default Re: How to Claim Roommate Income on Taxes

    Just to give you an example of some of the expenses that you can deduct:

    You figure out the percentage of the home that your roommate has the exclusive use of, and then you apply that percentage to mortgage interest, homeowner's insurance, property taxes, repairs, utilities, and any other expenses for the home. You can deduct the full cost of any advertising that you had to do to rent the space, or any legal fees or other expenses directly relating to the rental.

  5. #5
    Join Date
    Sep 2010
    Posts
    19,248

    Default Re: How to Claim Roommate Income on Taxes

    And depreciation. A competent tax professional can help you do this right. If you don't you may end up costing yourself money in the long run.

  6. #6
    Join Date
    Mar 2013
    Posts
    1,227

    Default Re: How to Claim Roommate Income on Taxes

    As previously suggested, have a tax professional help you.

    For years I rented out a garage apartment in my home. The amount of write offs my tax preparer found (depreciation, utilities, property tax, insurance, gardener, maintenance, repairs, etc.) reduced my income from the rental to such an extent that any additional taxes I owed were negligible.

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