Family member moved into our home
My mother-in-law just moved in to our home; she has health issues and unable to care for herself now. She only has SS as income. We pay for all her needs. She wants to pay something to help out and contribute and not feel like a burden. We don't need her help but she insists. What is the best way to structure her giving us some money (ex. $500/M). Have been told if considered rent it would be taxable.
Quick Answer:
From a tax perspective, structuring payments from your mother-in-law as rent would likely trigger tax consequences for both of you. Since she receives only Social Security income, any rent payments she makes could be considered taxable income to her. You, in turn, would need to report this income on your tax return.
To avoid this, consider a gift. Gifts under the annual gift tax exclusion ($17,000 in 2023) are generally not taxable to either party. If she insists on contributing more than the exclusion, you could discuss splitting the payments over multiple years or explore other non-taxable ways she could contribute, such as paying for specific expenses (like groceries) directly. However, I am not qualified to give financial advice. Consult a financial advisor for further assistance.
Note: This answer is provided for convenience only. It is important that you speak to a CPA about your individual tax situation.
