My 34-Year-Old Son Moved Back In. Should We Ask for Rent? A CPA Weighs In

A working adult child should help out — but asking for rent or using bill payments can create tax complications.

Money Talks News may earn commission or revenue through links in the content below. Our editorial team independently selects all products. Compensation does not influence our recommendations.

Picture receiving a letter like this:

“Our son is 34. He lost his job and moved back into his old room. He has a job again, but he hasn’t offered to contribute, and we’re both retired.

“My husband wants to charge him $800 a month in rent. I’m worried about taxes and our relationship. What should we do?” — Marcy

Marcy and Ken are fictional, but many real parents are facing the same situation. A Pew Research Center report found that 18% of adults ages 25 to 34 were living in a parent’s home.

Parents are also helping their adult children financially. In a Pew survey published in 2024, 59% of parents of adult children ages 18 to 34 said they had given financial help to a child in that age group in the past year.

I’ve been a CPA since 1981. My short answer: Yes, a working 34-year-old should pay his own way. But the way you structure that arrangement matters, because charging a family member for a room can create tax issues many parents never consider.

The IRS generally expects rental income to be reported on a tax return. And when a family member pays less than fair market rent, the agency may treat that as personal use of your home, which can affect what you can deduct.

Here are five points I’d share with Marcy and Ken.

1. Understand what “rent” means to the IRS

If you rent out part of a home you also live in, the IRS generally limits your deductions to the amount of rental income you receive.

In this case, charging $800 a month could mean $9,600 in annual rental income to report, with IRS rules limiting the expenses you can write off against it. Before setting up that kind of arrangement, ask a tax preparer how it would be handled on your return.

2. Covering bills instead of paying rent is not a tax workaround

Many adult children already contribute in some way. Among young adults ages 18 to 34 living with their parents, 65% say they pay household expenses such as groceries or utility bills, according to a Pew survey.

Assigning specific bills, such as internet service or a share of groceries, can be easier to track and helps him take on a real share of the household.

But don’t assume it changes the tax treatment. The IRS says that if a tenant pays any of your expenses, those payments count as rental income. Check with your tax preparer about how your setup would be classified.

While you’re sorting out the bills, it’s also a good time to review what the household is paying for in the first place.

Forgotten streaming services, free trials that never ended and bills that quietly rise every year are easy to overlook. Rocket Money connects securely to your accounts and puts every subscription on one screen, so you can cancel the ones you don’t want in a few taps.

It also negotiates cable, internet and phone bills and flags fee increases before they hit. Members have saved more than $880 million in canceled subscriptions so far.

Ten minutes could stop the leak for good. See every subscription now.

Quick aside — most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for more than 35 years. Want rock-solid advice? Sign up for the free Money Talks Newsletter. Takes 10 seconds. No fluff. No spam.

3. Put the arrangement in writing and include an end date

This is about clarity, not mistrust. Write down how much he will pay, which bills are his responsibility and about how long the arrangement is expected to last.

Set a time to revisit it in six months. Giving the agreement a date makes it a plan instead of an open-ended situation and makes it easier to discuss what happens next.

4. Don’t drain your retirement savings to support him

You are retired. Your savings need to last for the rest of your lives, and you cannot return to work as easily as he can.

If supporting an extra adult is causing you to withdraw more from your IRA, pause and run the numbers first. If the amounts are meaningful, it may also make sense to work with an expert.

One option is SmartAsset’s free matching service, which connects you with up to three fiduciary financial advisors who are legally required to put your interests first. They can help with tax planning, investment advice, Social Security strategies and other planning gaps you may not spot on your own.

The process takes about 10 minutes and includes a questionnaire. Near the end, you’ll be asked for a phone number: you can provide it, but you decide whether and when to respond.

SmartAsset provides the match, not the advice, and the service is designed for people with $100,000 or more in investments. Get matched with a fiduciary advisor free.

5. If he truly cannot pay, create a plan instead of giving him a free pass

Sometimes an adult child really is short on money. If that is the case, don’t demand cash he does not have. Ask for something else, such as a monthly budget he shares with you, a savings goal for his own place or help around the house.

The goal is not the money itself. It is making sure the arrangement helps him move toward independence.

My bottom line

Ken is right that a working adult should contribute. Marcy is right too: the way you handle it matters for both taxes and the relationship.

Keep the arrangement simple and clear. Have him contribute, check the tax implications with your preparer, put the agreement in writing, set a review date and protect your retirement first.

Letting a grown child move back home is one of the kindest things a parent can do. Helping him leave in a stronger position than he arrived is even kinder.

Sources: Pew Research Center; Pew Research Center; IRS; IRS