Tax/Income Question

[jsb]

I have a situation that I am curious about.

I have an old person that is renting a place and has been approved, etc. The rental company requires that you use an app to pay the rent. The old people in question think that this is equal to giving all of their money to some rental company. THERE IS NO REASONING WITH THEM.

Is there any tax implications if they write me a check and then I pay the rental company. Basically I'd be a pass through. It's $2500 per month, so significant and I think it would be fine, but I don't know much about taxes.

 

[CivEFootball]

So are you paying their rent by Credit Card and then raking those points?

 

[jsb]

I just want to pay it through my account. But the points would be nice!

 

[KennyPratt42]

My first question is, will the rental company set up an ACH (through the app or otherwise)? That seems like the natural solution to the problem.

I'm assuming this is a relative or close friend, worst case scenario I would download the app, have them give me a check for the first months rent, put the routing and account number in the app, shred the check, and tell the older person that you have it set up for them to have a wire transfer from their checking account each month (you can call it a digital check if that helps). If they won't go for that I would just have them give me the check before the ACH date each month then shred the check.

If you go with the pass through payment system, you don't have any real tax issues, but if you get audited you might get some questions about that money going into your account and where it came from. At the least I would keep pretty detailed documentation and maybe even something that spells out your arrangement that you both sign and date.

 

[JK4ISU]

I’d be worried that they would not pay you (run out of money, incapacity, etc.) and then you would be stuck with the bill. Could you open an account in their names and call it the rent account? They could then go to the bank each month and deposit a check into the account and then the rent would be withdrawn.

 

[TitanClone]

So are you paying their rent by Credit Card and then raking those points?

Guarantee they have an extra % on CC payments that's higher than the reward %

 

[ianoconnor]

I’d be worried that they would not pay you (run out of money, incapacity, etc.) and then you would be stuck with the bill. Could you open an account in their names and call it the rent account? They could then go to the bank each month and deposit a check into the account and then the rent would be withdrawn.

Unless OP is on the lease, they wouldn't be responsible for payment to the landlord.

 

[isufbcurt]

I have a situation that I am curious about.

I have an old person that is renting a place and has been approved, etc. The rental company requires that you use an app to pay the rent. The old people in question think that this is equal to giving all of their money to some rental company. THERE IS NO REASONING WITH THEM.

Is there any tax implications if they write me a check and then I pay the rental company. Basically I'd be a pass through. It's $2500 per month, so significant and I think it would be fine, but I don't know much about taxes.

No

 

[BCClone]

I have a situation that I am curious about.

I have an old person that is renting a place and has been approved, etc. The rental company requires that you use an app to pay the rent. The old people in question think that this is equal to giving all of their money to some rental company. THERE IS NO REASONING WITH THEM.

Is there any tax implications if they write me a check and then I pay the rental company. Basically I'd be a pass through. It's $2500 per month, so significant and I think it would be fine, but I don't know much about taxes.

No issues for you, but he’s basically putting trust in you that you don’t just take the rent and not pay it for him. (Not saying you would do that, but it could happen with some people)

 

[JK4ISU]

Unless OP is on the lease, they wouldn't be responsible for payment to the landlord.

That’s true, but if the rent comes out of his account and the old people don’t pay him, there will be a hassle. Would
I do it for my mom, yes. Would I do it for an elderly neighbor, no.

 

[Cyclones_R_GR8]

I don't think this is a good idea. $2500 a month exceeds the amount you can gift someone so in the eyes of the IRS you would be getting an extra $30k a year. At least how I understand it, but then again, I'm not the sharpest tool in the shed.
I know you're just being an intermediary but not sure the IRS would see it that way

 

[Clark]

If i were you I'd report the 2,500 per month received from old people as income on a schedule E and then report the 2500 a month paid to the landlord as an expense.

 

[isucy86]

I would think the old people could open a 2nd account at the bank and transfer/deposit a check for just the rent amount each month. And have the APP just withdraw what the old person deposited. They'd see the transactions on their monthly paper statements they would become comfortable.

You mention the old person is being unreasonable. Never know, they could have dementia or Alzheimer's. So you have to decide if you're in for that ride.

 

[Pat]

If i were you I'd report the 2,500 per month received from old people as income on a schedule E and then report the 2500 a month paid to the landlord as an expense.

No

This made me laugh.

 

[ruxCYtable]

I have a situation that I am curious about.

I have an old person that is renting a place and has been approved, etc. The rental company requires that you use an app to pay the rent. The old people in question think that this is equal to giving all of their money to some rental company. THERE IS NO REASONING WITH THEM.

Excuses are like ass holes. Everybody's got one. You want the place? This is how it is.

My first question is, will the rental company set up an ACH (through the app or otherwise)? That seems like the natural solution to the problem.

Good luck getting an ancient to agree to that. All automatic payments are some kind of scam, in their book.

 

[jsb]

I would think the old people could open a 2nd account at the bank and transfer/deposit a check for just the rent amount each month. And have the APP just withdraw what the old person deposited. They'd see the transactions on their monthly paper statements they would become comfortable.

You mention the old person is being unreasonable. Never know, they could have dementia or Alzheimer's. So you have to decide if you're in for that ride.

You would think. But you would be wrong.

We’re dealing with a level of paranoia that is really really unhealthy.

And I’ve considered the dementia angle. I don’t think that’s it, but it’s hard to judge since there’s no way they’ll consider that.

 

[BoxsterCy]

No

Post of the day. Concise and to the point!

 

[BoxsterCy]

You would think. But you would be wrong.

We’re dealing with a level of paranoia that is really really unhealthy.

And I’ve considered the dementia angle. I don’t think that’s it, but it’s hard to judge since there’s no way they’ll consider that.

It does seem it could be dementia related. On the other hand, with all of the scams reported that prey on elderly citizens, a person not suffering from dementia that hears about them might reasonably be a little paranoid, but not unreasonably paranoid.

My sisters late FIL was like that. Total convinced his one son, who did all of their finances and arranged for their health care needs, was "stealing" from them. He was not. Truth was he was a tireless care provider for them. There was no "reasoning" with him either and it definitely was dementia related in that case. When it's dementia related there is no reasoning to change their minds which is what stuck out for me in your post.

 

[jsb]

It does seem it could be dementia related. On the other hand, with all of the scams reported that prey on elderly citizens, a person not suffering from dementia that hears about them might reasonably be a little paranoid, but not unreasonably paranoid.

My sisters late FIL was like that. Total convinced his one son, who did all of their finances and arranged for their health care needs, was "stealing" from them. He was not. Truth was he was a tireless care provider for them. There was no "reasoning" with him either and it definitely was dementia related in that case. When it's dementia related there is no reasoning to change their minds which is what stuck out for me in your post.

Yeah, it’s definitely a possibility. But it’s been a part of their personality for their whole life. And it comes and goes. Personally I think a small dose of anti anxiety meds would do wonders.

 

[JRE1975]

You should contact the landlord and tell them the situation, and make it their problem. I bet they make an exception for them to mail in a check.