Room and Board Income

Forum|Forum|6 years ago
February 21, 2020
1 reply
16 views

I have a client that has a personal service contract with an elderly parent. This contract includes payment for room (FMV) and board. Do I report both income sources on Schedule E? Or is board considered cost sharing and not reportable?

Lacerte Tax

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BobKamman

Level 15

The elderly parent no doubt is trying to spend down assets in order to qualify for Medicaid (or similar welfare program). There is a basic discussion of this strategy here:

https://www.carolinafep.com/library/could-your-family-benefit-from-a-personal-services-contract-for-family-caregiving.cfm

Which includes this advice:

Finally, remember that whenever a person is hired to perform services in exchange for compensation, that person is required to report the income. In other words, if you enter into a personal services contract with a child or family member, they are obligated to report the payments received from you as income on their annual income tax return. It is recommended that you consult with your accountant to ensure compliance with all tax rules including any applicable income tax withholding rules, social security rules, and employee compensation rules.

T

TaxMom12Author

Level 4

Thank you for the additional information. I'm still unclear if the "room and board" should all be reflected on Schedule E. The taxpayer has grocery expenses to offset the "board" portion. The renting of a room is self explanatory and there is reportable income for care-giving, I'm just hung up on the board if you have any additional thoughts?

BobKamman

Level 15

I'm not sure it goes on Schedule E, rather than Schedule C. Preparing meals is a business. And now, are you telling us she's also receiving a W-2 from a public agency that pays people who care for their relatives?

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