Is room & board paid by non-dependent son who live w/ parent taxable?

Question

Let's say if 30-yr-old son still live w/ his parents and pays several hundreds dollars for room & board to his parents every month, is this money he paid his parents taxable? Should parents include it as taxable income in their tax return filing?

Thanks for all your response. B/c to apply for real property tax credit, it asks applicant to report amount son pays for room & board if living in same house. If he doesn't pay, then need to include son's income on the application form. And it requires a copy of applicant's (parent's) tax return mailed along w/ tax credit application form. So if son pays, and it's taxable. Parent should include it on tax return and report it on the real property tax credit application? Or it's ok not to include it on tax return but include it on real property tax credit application?

Answer 1

It would be taxable income to parents, but not be deductible to son (although some states do allow for a rent expense deduction). But let's do a reality check here, no parent is going to declare the income as rent, and no son is going to report the parents for not declaring the rent, and no son is going to take a state rent deduction (at least not if he wants to stay a son).

Answer 2

My interpretation is that your son is not a tenant but a family member. Any payments he gives you are not a taxable event and do not have to be reported to anyone. I would not include any money you receive from your son on your federal tax return or your property tax credit application.

Answer 3

Interesting.
If the parents are bent on considering this as payment for room & board, yes they have include this in their income.
(Then what does a family mean?).

If it is considered cost/expenses sharing, then no.
If is considered a gift from son to parents as a gratitue, then no.

Answer 4

Unless these people are living a LOT cheaper than I am, "several hundreds dollars" a month is much less than 1/3 the cost of 3 people having food, utilities, and who knows what else living in a house. This to me is just cost sharing, not rent.

Answer 5

They cannot include it on the tax credit application unless they showed it as income on their income tax return. It is either a gift or it is an income; it can't be both.

Answer 6

Different accountants would probably have different opinions on this one.

My opinion would be that he's just sharing in the expenses of the household, so it wouldn't have to be reported.