Caregiver exemption subletting

Hi,

Thank you for taking the time to read this.

I am living in my mother's house in Massachusetts. I am on SSDI. I took care of my mother, who is now in a nursing home. Medicaid allowed the caregiver exemption that lets me stay in her house, pay all the bills (mortgage, taxes, utilities...) and keep her house out of the assets that Medicaid takes when someone goes into a nursing home.

I need to have someone move in to share expenses.

1. Is that taxable income?
2. If so, in what category?
3. Is there a limit on what I can take in, below the cost of the total household expenses?

Any additional information, tips or suggestions would also be appreciated.

Thank you again. 

Answer : 

1 : If you own the home, then the income you receive from renting out a part of the home must be reported on your tax return. The expenses for that part of the home can be deducted as an expense. These must be reported on the IRS 1040/ on Sch E of 1040;however, the owner of the house is your mother, and she lets you me stay in her house (you do not pay any fair market value of rent to your mother). If your mother requires you to live on the property in order to perform your job duties (on-site management of rental properties, caretakers, etc.), it is non-taxable to you performing your duty. So if you are maintaining the property, and it is "for your mother’s convenience" and the free rent is not taxable. UNLESS you are the owner of the house, it is not your rental income to be reported on your return. Otherwise, your mother must charge fair-market rent (taxable income to her).As long as your mother lets you someone move in to share expenses (and the tenant pays rent to you and you keep it), then, it is a gift, I guess, for you. As long as you get rent free occupancy without having to do anything, the transfer is gratuitous i.e. a gift. If you're receiving SSDI benefits and the SSA finds that you're engaged in work that it considers substantial it has the authority to require you to repay the benefit overpayment amounts and/or cancel your SSDI eligibility altogether. So you need to find out how a gift could affect your current benefits. You should know that disability benefits are not typically affected by extra income. This is because people become eligible by meeting all the criteria and also paying into the system for years through a job. Thus, they are usually able to receive cash gifts without affecting their case either way. The problem arises when you also receive Medicaid or SSI, as these programs do consider any additional income. I guess you need to contact SSA fro more accurate info in detail.

2 : As long as the free rent/rental income from a tenant(actually it is your mother’s rental income as she owns the house) is a gift, you , as a done, do not need to report it on your return.

3 : I guess you can check it with a r/e agent in your local area for property FMV of rent in the area.

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