Ok, so, we're putting a little MIL room above our garage. It will have shared water, but a separate water heater, its own entrance, and no access to the backyard. We're talking about getting a roommate for the school year (we're in a college town), furnishing the space, and providing utilities/internet.
Our questions are about tax obligations. If we were all sharing a living room, kitchen, and utilities, but only my name was on the paperwork I wouldn't think of their payment as income. But our plans seem more renter/landlord-like because we're not sharing common rooms. And there I would be paying taxes on the income.
Because all utilities are included (there isn't really a good way to parse them out) then part of their rent payment (the difficult to separate utility part) shouldn't be counted against me as taxable income, right?
I'd like to do this as simply as possible. I don't want to do something so drastic as form a c-corp or s-corp just to have some help with the mortgage each month. But I don't want to do anything illegal either. Who knows if we'll even like having a random person staying on the property. This is just dipping my toe in the water.
Are there different rules for roommates vs, renters?