Can I claim money received from a parent in exchange for services as self-employment income?
I am over the age of 21. For financial reasons, I live with my parent. Rents are extremely high around here, starting at $1,300/month for a 1 bedroom.
My parent pays me about $13,000 a year, and in exchange I cook and clean and manage the household finances and make repairs and assist in managing a rental property. I only do this for my parent, not for any other people.
So far I've been considering this money to be gifts, subject to gift tax rules. But could I instead declare them as self-employment income (or alternatively, household employee income, subject to Nanny Tax rules), so that I could pay self-employment tax and income tax on them, earning Social Security benefits on the basis of that income? Maybe even open an Individual 401k.
Or would the IRS scoff at that, say that the money I receive is a gift, not taxable income, and demand that I stop declaring it as self-employment income and paying taxes on it?
I'd like to start declaring it as self-employment income, but I don't want incur the wrath of the IRS.
I am not considered a dependent on my parent's tax return, and file my own taxes as a single non-dependent filer.
Last edited by horselesscarriage : 03-29-2016 at 10:51 AM.