Errors in Airbnb income/payout reporting

1

Hi Folks,

I’m an Airbnb host and also an Indian taxpayer.

Airbnb provides information to the Indian government about the income it pays hosts for tax purposes. But I think it is doing it wrong, since at least last year. Below I include an email I sent Airbnb yesterday. They have not replied to it yet, at this time of writing.

I just wondered what the forum’s take on this was. I have not been active here in recent years, but when I was there were almost no active members here from India. And I do not have the impression that this has changed. Regardless, I was unable to find discussion on this forum about any similar issue. I am also on two different WhatsApp Airbnb groups, one general, one specific to Maharashtra. WA is obviously not suited to be a discussion forum, but I have not seen any discussion about this issue there either. Which is a little puzzling. But I plan to post something about this there too.

It’s possible I am mistaken that Airbnb is reporting this wrong, but if so, my accountant is mistaken too, as mentioned in the email.

A little more context about Form 26AS. This shows who has withheld money for tax related reasons (Tax Deducted at Source) from my income. In India, Airbnb withholds 1 percent, for reasons I am unclear about. They didn’t do so earlier. That detail is not important to the issue described, and Airbnb is aware of it anyway, so I didn’t bother to specifically mention it. I know that tax withholding exists in the USA as well, because I lived there and paid taxes there. So perhaps hosts there have not experienced a similar issue, otherwise I would have found some discussion of it.

The email talks about two issues, one general and also a specific issue where Airbnb totally messed up the accounting of a specific reservation’s payout, which is a separate headache. I do not think the latter is of general interest, so I have removed the part of the email which refers to this.

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Date: 21st July 2024
To: Airbnb Community Support reply@email-support.airbnb.com
Subject: Errors in Airbnb income/payout reporting

Dear Sir/Madam,

I am an Airbnb host in Mumbai, India. My listing is https://www.airbnb.co.in/rooms/8235275. I reside and pay taxes in India. Income taxes in India are due on 31st July 2024 for the FY 2023.2024 tax year, so I would appreciate a quick response.

I have some problems with how Airbnb is reporting my income for the current financial year, FY 2023-2024. I have a general problem and a specific problem with a single reservation. First, the general problem. This problem was also present last year, but I did not report it then.

In my Annual Tax Statement, the Form 26AS that documents the Tax Deducted at Source (TDS), Airbnb reports my income incorrectly in the column “Amount Paid/Credited”. It includes the 3 percent host service fee that it deducts from the host’s income. This contradicts the host payment information that Airbnb itself makes available on its web site for hosts in the Payout section, specifically, the “Amount” column, which is correct.

My understanding is that the “Amount Paid/Credited” filed and the “Amount” field should be the same. They should both be the amount that is paid to the host after the 3 percent host service fee deduction, but without the 1% TDS deduction. But they are not. “Amount Paid/Credited” includes the 3 percent host service fee, but the “Amount” field does not.

Given that this is the information submitted to the government, my Chartered Accountant told me the amount reported in the Form 26AS is the amount I need to report to the government as my Airbnb income, and the amount I need to pay tax on. Which means I am paying tax on the 3 percent host fee that Airbnb deducts. Or in other words, I am paying tax on income which I have not received.

It is possible that I am missing something, but if so I would like an explanation. Assuming my understanding is correct, I would like Airbnb to report the correct income on Form 26AS for myself and everyone else, so this problem goes away.

[Details about the particular reservation issue removed.]

It would be great if these errors could be fixed both in the Airbnb website payout information, as well as in the tax forms sent to the government. Incorrect records are very troublesome.

I spoke to an Airbnb rep, and he told me that he had reported the specific issue with the reservation. But I don’t know if they will correct the records.

Regards, Faheem Mitha

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Fajeem, I can’t speak to the tax details in India, but when the Mexican govt. started making Airbnb charge, collect, and submit taxes, it was so confusing to me, I had to hire an accountant who is familiar with Airbnb, to deal with it.

Here, for instance, Airbnb withholds half the goods and services tax of 16%, releasing 8% of it to the host, from which we can deduct expenses, and then submit the balance ourselves. They collect the state occupance tax and the income tax, withhold that and submit it to the tax dept. (supposedly).

Some third party entity called Facturify that Airbnb uses for Mexico sends me a form each month showing income, taxes withheld and taxes released to be paid by the host, which I also can’t make heads or tails of.

So I can’t give you any advice, other than to try to find an accountant who can figure out what Airbnb is doing with the tax withholding and reporting in India who could figure out if there are actually errors or it’s just difficult to understand bookkeeping.

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Hi @Muddy,

Thank you for your reply. I don’t think the issue is so complicated. As per my earlier message, it just seems to me that Airbnb is reporting the wrong information. But I suppose that if one has not seen the details, it’s hard to comment.

Anyway. I have not heard back from Airbnb yet. Though I am not particularly hoping for a helpful response. In my experience corporations are mostly interested in covering themselves, and are adept at making black seem like white. I will update this thread with Airbnb’s reply if and when they do reply.

Also, taxes are due at the end of the month, so there is no time to find a different accountant. And finding a competent and reasonable accountant (or any professional) in India is no easy matter. I will probably end up paying taxes on the 3 percent host fee unless Airbnb quickly gets back to me to tell me they made a mistake. And I’m not holding my breath.

4

Hi Faheem,

I can’t be of assistance either but I just wanted to say hello. It’s a long time since we last saw you here - I hope you’re doing well. :slight_smile:

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5

Hi Faheem!! It’s good to see you.

This question comes up here too and it comes up every year around tax time. I am hopeful I can help. I know our tax laws are not the same but earnings vs income vs expenses are.

It sounds like you want your earnings as reported by Airbnb to be the same as what you received as payouts but they are not the same. Airbnb must report your total earnings which is a different, larger number that includes the fees.

In simplest terms, it’s an order of operations issue. Your total earnings include the fees. The fees are not deducted from them as you technically earned them even if Airbnb is going to pinch from them later. The fees are then later deducted from your income as reconciled on your tax form.

Airbnb must report your total earnings and the host service fee is technically part of your earnings. We all know, as hosts, that we never see the Airbnb host fee so it feels like it isn’t part of our earnings, yet it is. However, it is not part of your income and that is why you deduct the service fees as a business expense on your taxes which effectively removes the fees from your income so you’re not taxed on them.

I don’t think Airbnb is reporting anything in error. It sounds like they are reporting earnings there in the same exact manner that they report them here.

If your booking is worth $100, your earnings are $100. Then Airbnb takes their $3 out of it and you get $97 which is your income. Airbnb reports the $100 as your earnings. You deduct the $3 as fees as a business expense and you only pay taxes on the $97 as income.

Hopefully, this is not too convoluted. I apologize. I am just tired. Please ask for clarification if I can help.

Also, I found a fairly recent handout regarding income taxes for Airbnb in India that may be helpful. They even mention deducting the host service fees in there. It’s a PDF though and I can’t remember how to get it to you from here. I will try to see if it can be attached to a private message.

Here I think this’ll work:

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