I've been renting a room in a house in California, USA for a few years. Each month, I pay an advance payment to the homeowner. The rent is currently $650/month, and he wants cash. Legally speaking, am I required to report those cash payments to the IRS? And, does the IRS have a webpage that has instructions or regulations regarding these cash transactions?
In general, a person who pays for goods and services with cash is not obligated to report the payments to the IRS (thus simplifying your trip to the hardware store, purchases from a vending machine, etc.). There are laws requiring reporting of receipt of cash 31 USC 5313 which applies to banks, which are regulated, but Ordinary Joe is not subject to this law. Receipt of over $10,000 in one or more related transactions, in the course of business, must be reported under 26 USC 6050I. The IRS also says "File Form MISC-1099 for each person to whom you have paid during the year" if you pay at least $600 in rents, prizes awards, "other income payments", medical and health care payments and so on. Later, they list exceptions including payments for merchandise, telegrams, telephone, freight, storage, and similar items; payments of rent to real estate agents or property managers. The instruction book then says, even more specifically,
Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable.
And then they repeat the exception for merchandise: but you're not paying to a real estate agent or a property manager, so that exception is not relevant (but the fact that the payer reports only in case it is a business covers your situation).