How much to charge your kids if they move back in with you after graduation?

There are certainly days when I look forward to the kids moving out and giving me a little peace and quiet. That day will come soon enough – they are 5 and 9 now – and off they will go to college. More and more in this economy, kids are moving back home after school after they find that jobs are scarce, or maybe that mom or dad will still do their laundry.

How much should you charge a returning prodigal son or daughter? Experts agree: It depends.

If your son or daughter has a job, you should charge something akin to the going rate based on real estate prices in your neighborhood. Especially if this is the first “on their own” experience, it’s important that they understand living within your means before they develop bad habits based on an unreal situation. It’s nice to live rent free at Casa Mom and Dad and spend all that extra money on cars and parties, but that’s not the way life works.

On the other hand, if no job is to be found, it’s still important that your kids pitch in in a way that goes beyond their responsibilities before they started school. You might give them some slack if they are deep into the first throes of looking for a job, but still ask for help with household expenses or extra chores. You’ll have to decide what is reasonable, but it might be important to make it clear that this is just a temporary situation until the economy improves.

If you decide to “rent” to your child, remember that technically that is taxable income and should be reported. Inter-family finances are not an area that the IRS scrutinizes, however, though you should not try to generate big rental losses on the depreciated second bedroom you rent for $100 to your tenant child.