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I have been renting a room to a friend of mine for the past

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6 months at $400/mo and...
I have been renting a room to a friend of mine for the past 6 months at $400/mo and when i did all of the things i was supposed to do on turbotax my return jumped by 2800, this seems rather high and i just wanted to try to see if this is expected.
Submitted: 7 years ago.Category: Tax
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2/1/2010
Tax Professional: Anne, Master Tax Preparer replied 7 years ago
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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HiCustomerbr />
Thank you for using justanswer. Please tell me a little bit more about your situation. When you say "you did all of the things you were supposed to do on Turbo tax" are you speaking about counting the $400 that your friend paid you as rental income and you pro rated all of your household expenses based on square footage?
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Customer reply replied 7 years ago
yes i counted the 400/mo (times the 6 months hes been living here) as rental income, and then entered all of the expenses like mortgage interest, taxes as a percentage of the house he occupies.
Tax Professional: Anne, Master Tax Preparer replied 7 years ago
As long as you pro rated your mortgage interest, taxes, utilities, etc by both the % of business use based on square footage, and also pro rated them based on 6 months business use, then without actually seeing your tax return, I can only tell you that your theory is correct.

I would expect your refund to increase since you are now able to deduct a % of your utilities, trash removal, lawn care, etc that would previously have been considered personal expenses and not deductible in the past. You would also now be able to depreciate the % percentage of your home which could also increase your refund by lowering your taxable income, especially if, after deducting all allowable expenses against the $400/month rental income you showed a loss on your 2009 Form 1040 (Schedule ESupplemental Income and Loss. Please see below:

Renting Part of Property

You might want to find a local tax pro in your area and have them look it over for you to be sure you prepared your taxes correctly just to be sure. Many companies will perform this service for a nominal fee.

I hope this helps.
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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