Questions for the Tax Lady: September 14th, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: If I rent out a spare bedroom in my house do I need to report the income to the IRS?

Yes, you will need to report your income to the IRS. When you prepare your tax return you should complete a Schedule E and attach it to your IRS Form 1040. In addition to rent you will need to include any lease canceling payments, or other expenses paid by tenants.

Question #2: How do I change the amount of taxes that get taken out of my paycheck?

Changing your withholdings or claiming an additional dependent is actually very easy. Just ask your employer for a new IRS Form W-4 and fill it out to reflect your current financial situation.