How do you file? Schedule C or E? LLC with home under own name and do our cleaning

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We’ve been all over the world and back trying to figure out the best route to go here. Any insight from folks with similar situations would be awesome.

  1. Yup, I know I need to tax attorney this one. (Just want to get your steps)
  2. Created LLC to try and protect ourselves from any mishap.
  3. House is owned in our names, not the LLC
  4. We file income through the state for occupancy taxes, etc.
  5. Been told to go with C to be on the safe side (pay more)

We are currently filing schedule C due to the fact we clean the home and file taxes for it, however, it sounds more and more like we should just scrap the LLC and treat this only as a rental property income. We have good rental insurance (Proper) and I’m really starting to 2nd guess our route here.

Thank you for the views and any input you may have!

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Since 2002 when i took over the family summer cottage rental colony that my Mom (who died then) had run since 50’s, I have been filing it as rental property income as the tax guys who did her filings had done for years. No LLC or anything formal so just in my name though the town has me listed and inspected as business.

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Neither. Doesn’t help you right this second, but we have it in an S-corp (it’s a second home and the title is in the name of the S-corp). Gifted some shares of the S-corp to the kids, so the income/loss gets distributed. File the S-corp forms, send K-1’s to everyone.

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If owned by a married couple and you are in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin) you are allowed to treat it as a disregarded entity per IRS – as if it were a Single Member LLC or “transparent” for tax purposes – and file Schedule E, passive rental income, or sole proprietor Schedule C, if you offer substantial personal services such as concierge, meals, daily cleaning during guest stay, etc. OR your average rental is 7 days or less (you may not owe Self Employment taxes in the latter case; consult with a tax advisor). In other states, the default is a partnership tax return (Form 1065). Unless, for all cases above, you elect the business to be treated as a Corporation.
For discussion purposes only, not professional tax advice.

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5

My wife and I put our Airbnb under my wife’s existing single-member LLC and we report the income on schedule C. The taxes are higher, but it allows us to put more pre-tax income into her retirement saving (SEP IRA) and the higher income will increase her social security benefits. This is important to me in case she outlives me by many years (just don’t tell her that).

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