<prompt> Human: He doesnt declare it as income and doesnt pay taxes on it. Is he at risk to get audited? Whenever I as he says, Theyre just friends helping me pay some bills. Is it something that can bite him in the ass? He has a tenant agreement with each person. Edit: Thank you guys for your help. As I understand: report the income, maximize deductions, its more paperwork but wont be as expensive as getting fined so better to suck it up.  <response>: Is he evading taxes and breaking the law? Yes. Will he likely get caught or even investigated? No.The IRS is an underfunded, understaffed, and overworked organization. They have to prioritize what they chose to investigate. Chasing down a guy not reporting rental income on a few rooms of his house, is not going to come close to getting on the IRSs radar.Really, the only area of the law that could cause problems for this friend is local tenant-landlord laws and regulations. If things go bad with one of the people he rents a room to, things could get ugly and expensive fast. 