I have a roommate who pays rent to stay with me. If he pays cash and I deposit it into the bank, can I get in trouble for not being able to account for where that money came from? We're not talking huge amounts, just 700 per month. Or is this something that I need to pay taxes on?
2007-03-30 03:05:50 · 8 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
No. They'll be claiming the rent on their taxes. If you're worried about accounting for all the money going in & out of your account, give your roomie reciepts for each rent deposit & make a copy for your taxes.
2007-03-30 03:09:29 · answer #1 · answered by Merk 2 · 2⤊ 0⤋
If you are renting, you should write on the deposit slips that it is rental "reimbursement", and retain all the deposit slips.
Questions would only come up if you ever got audited by the IRS. You would have to explain every deposit.
You might also have an agreemant written up as to the terms and amount, signed by both. You could back date this to the beginning.
If these are rental payments on a home that you own or are buying, then those payments are rental income and are subject to tax. In this case, you would have some deductions, such as partial utilities, his BR space, and possibly depreciation. This can be very complicated, and you would need a CPA.
Again, this may only come up if you ever get audited.
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I suggest that you not deposit those in a bank account. Use the cash for living expenses, groceries, and personal expenditures. You could then transfer money from your checking account to savings, if able.
Hope this has not been going on for long, and that you never get audited.
2007-03-30 03:31:15 · answer #2 · answered by ed 7 · 0⤊ 0⤋
Paying Rent In Cash
2016-11-07 07:04:31 · answer #3 · answered by ? 4 · 0⤊ 0⤋
I agree with the others - depositing $700 in cash per month will not attract any bank's attention. Strictly speaking you should be paying taxes on this $8,400 per year in income. Again, this is probably not enough money to attract much attention to yourself.
If you start depositing $10,000 per day in cash, this is completely different.
2007-03-30 05:28:53 · answer #4 · answered by Adoptive Father 6 · 0⤊ 0⤋
The bank doesn't ask you to account for where you're getting your money! They could care less (although if you deposit more than $10,000 in one day they have to submit a special form to the government for tracking/documentation purposes).
You are supposed to report that income on your tax returns IF you own the home/condo you both live in. If you don't personally own the property, then technically you're sub-leasing, and I don't think you'd have to count that.
2007-03-30 04:55:32 · answer #5 · answered by lizzgeorge 4 · 0⤊ 0⤋
First off, no there will be no trouble in depositing the money. With regard to taxes, if the rentee is claiming it as a deduction on his/her taxes, then you are forced to include it as income on your taxes as rentor. But, to offset this, you still can deduct all relative expenses for same as well as interest on your mortgage.
2007-03-30 03:15:33 · answer #6 · answered by Ted 6 · 0⤊ 0⤋
nope. wont get in trouble
2007-03-30 03:08:37 · answer #7 · answered by jenivive 6 · 1⤊ 0⤋
why are all the answers so short these days?
2016-08-23 22:26:11 · answer #8 · answered by ? 4 · 0⤊ 0⤋