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What is defined as INCOME" exactly by the IRS when one files their tax returns?

Los Angeles, CA |

I filed taxes last year. I did not report income I received into my account from tenants residing at my parents home they rent to. They would normally give me the checks and after each deposit I would in turn write a check payable to the bank into my parents account for the rent checks I received from the tenant. I did not report this on my taxes because I thought it was not income nor was it an expense; it was just an easier way for us to handle this because my parents care not to deal with their tenants. Is this income?

Attorney Answers 3


  1. Best answer

    Rents are the income related to the right to use property. The owner(s) of the property are entitled to the rents. If you did nothing more than collect the rents on behalf of the owners, it will be the owners that report the income for tax purposes. If you performed services for which you were compensated, say you are entitled to keep a percentage of the rents collected as a fee for your services, then that fee would be reportable as income on your own tax return.

    Best wishes for an outcome you can accept, and please remember to designate a best answer.

    This answer is offered as a public service for general information only and may not be relied upon as legal advice.


  2. It may not be income to you but you are depositing the rent checks into your bank account. This means you have deposits that an IRS auditor would conclude should have been reported on your tax return based on your bank statements. The problem that you have is that you are not reporting the transactions to you, and to your parents. The solution to report both sides of the transactions on Schedule E of your 1040 ,and you should issued your parents a 1099 for the rents you deposted. This solves your problem and your parent's duty to report the correct amount of their rental income.

    Hope this helps.

    THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court.


  3. If I understand your question tenants give you checks which you in turn deposit into your parents account. As this is there property you simply endorsed the checks to the m for their deposit (even though you made the deposit). It does not sound like you took any money for this. If that is the case then the income belongs to your parents and they should report the income and expenses on Schedule E of their income tax return.

    The above statements are provided as general information and not intended as legal advice. Each matter has its own set of unique circumstances that cannot be adequately addressed without consultation. You are strongly advised to hire an attorney licensed to practice law in your state to represent you.

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