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If you DO NOT get reimbursed and you provide more than 50% of an individuals support you can probably claim the friend as a dependent thus reducing your annual tax burden. You might be able to increase your exemptions so that less tax is with held each month. If you DO get reimbursed you might have to claim it as rental income and report it on a 1099. The best thing is to talk with a tax specialist in your state/city. There are implications for state and federal taxes.
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