How much of a yearly utility bill can be deducted as rental expense for a room rented out in a house?

When determining the utility bill deduction for a room rented out in a house, it's essential to understand how to allocate shared expenses like utilities based on the rental arrangement. The correct answer is based on a reasonable calculation of how much of the total utility bill can be attributed to the rented space.

For instance, if the entire house's utility bill for the year is $1,500 and the rental room constitutes one-third of the home, the deduction would be approximately $500 (one-third of $1,500). However, if specific usage patterns or other factors are considered, adjustments might lead to a different breakdown of expenses.

Choosing $157.50 implies that this amount is derived from a specific calculation correlating to the rented room's proportional use of utilities over a year. Therefore, it reflects an appropriate and justifiable portion that aligns with the IRS's guidelines on allocating shared household expenses.

This thoughtful calculation shows the correct interpretation of the tax laws regarding rental expenses and ensures that the deduction claimed is reasonable based on actual expenses incurred for the rental activity. Understanding the rationale behind this can help in accurately claiming deductions and adhering to tax regulations.