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Jen and Ken live together in the house that Ken owns. They are an unmarried couple and intend to stay unmarried but live together indefinitely. (They function as a married couple essentially but without the piece of paper.) Jen makes $30,000 year and pays $400/month to Ken as to share housing expenses and half of the utilities. Ken makes $60,000 a year and pays the mortgage and the other half of the utilities.

At tax time is it true that Ken has to declare any money Jen gave him as income?

Not that she asked, but does Jen realize that she's helping Ken finance his equity in the house with no protection for herself? Now that no-fault divorce has been supplanted by no-marriage divorce, both of them ought to be consulting lawyers to make sure that they're protected should something untoward happen to the relationship. (This is not just anti-romantic. Think of how many people who went to work on September 11 thinking they'd come home to meat loaf that night.)

J & K should determine their intention as to the financial arrangements and then conduct themselves accordingly. If Jen is renting from Ken, he has rental income and the corresponding expenses, which he'll show on Schedule E. If Jen is contributing $400 a month for utilities and food, shall we say, while Ken makes the mortgage and property tax payments, there's no income to Ken.

In short, get your story straight and stick to it.

Phil Marti
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