This forum is dedicated to connecting hosts with other hosts. Sign up to get the latest updates and news just for AirBnb hosts! Note that we are not affiliated with Airbnb - we are just passionate hosts!
The collecting taxes in cash is new to me, I had added it after reading other posts on this forum.
I have been paying taxes already, but here’s where I am confused so maybe someone has advice.
For round numbers sake, let’s say I earn $100. My tax rate is 6% state and 9% county, so a total of 15%.
When I did the taxes the first few times, I stated on the forms that I earned $100 and I paid $15 tax, which effectively means that I am paying the taxes out of my own pocket. Not my favorite situation, but I thought I had to claim all the money I earned as income.
Should I be doing the backwards math and reducing the amount of my earnings - in this case $86.96 would be claimed as earnings, and the $13.04 is the tax paid.
What about at the end of the year when I do my federal taxes? Since I don’t get a 1099, or any kind of line-item statement from Airbnb, so I just keep doing backwards math to get the 15% out of the total earnings?
Thanks
Edited to add: backwards math means working backwards from the total to get the sum of the parts.
I agree with this BUT here in NYC that’s what a lot of places on Groupon do. You buy a groupon and go get a massage or whatever and they’re like mkay you have to pay $20 in taxes and would you like to leave a tip?
And to people saying to just raise your prices…that makes no sense. You can easily price yourself out of your neighborhood by charging more.
@CatskillsGrrl, are you saying you would rather pay airbnb’s percentage on the room tax instead of paying it to the host in cash? I think the main reasons some hosts collect it in cash is so guests won’t be paying air’s percentage on it, and it may make bookkeeping easier. I’m asking because I can see your point from an uneducated guest’s perspective.
That being said, I do build it into my room rate, but I’d rather not for the reasons mentioned above. As well, I am sure that other hosts in my area are simply not paying the tax, which puts me on an uneven playing field. My place perhaps looks more expensive than it should, but I am probably making less money than other hosts who just don’t bother to pay the tax.
@Chloe, I am an uneducated guest, I suppose, if you say so, but no - I don’t want to deal with a host who expects to collect cash from me. It feels underhanded. Your normal guests don’t mind, that’s great, but under the table cash to the host is not something I would entertain.
It’s not under the table…well at least in the way you are describing. Sure there’s no receipt for it, but Airbnb has lots of info about collecting taxes on their website. Paying direct in cash IS an option. I have just started doing this and so far nobody has balked. If they do, they are free to move on. It’s completely ridiculous to be putting tax paying hosts in this position in the first place though. I hate it to the ends of the earth because it (may) make me look suspect. But I am not going to evade taxes (they will catch you), make my guests pay commission on taxes (highway robbery), or price myself out of the game (too bad competitors!).
@konacoconutz collects her taxes the same way - cash at the door. I don’t believe I have read any posts from her about disgruntled guests??
It’s totally your choice how you collect your taxes @CatskillsGrrl and how you react to being asked to pay cash, but remember, Airbnb is the one putting hosts in this VERY awkward position. Nobody would do it if they had another (above board) choice.
Oh goodness @CatskillsGrrl, I didn’t mean to say that you are an uneducated guest. Only that from the perspective of guests who don’t know Airbnb doesn’t provide an effective mechanism for collecting tax, I can see your point that they might feel it’s somehow underhanded.
Before Air collected in my state, I would always tell guest to be sure they have exact change and that I would provide them a hand written receipt. On the receipt I would note their reservation number, total rent, and dates of stay.
Haha…my receipt wasn’t as formal as even on being out of a receipt book. I just grabbed whatever scratch piece of paper I could get my hands on and I would write:
Today’s date
Received from (Guest name) $75.12 for 11.75% NC lodging tax for Airbnb reservation #######.
You’re right. I have never heard of them. A quick search of the local and state revenue authorities and as far as I can tell I don’t have to. Only hotels and motels (i.e. more than 5 units). The only thing I pay is income tax.
I’ve been an AirBnB guest too in several states and it has never come up either.
Does anyone know what the requirements are for Georgia?
@Geoff - Yes, my conclusion is the same. I can’t stress enough how much this stuff varies from host to host depending your local government. London is not the same as Catskill, NY. A neighboring town in Greene County doesn’t even have a building code delineating commercial and residential land use. “Transient occupancy taxes” are not a priority.
I am not from Athens…I am from NC. But I did a quick google search, and even if your accommodation does not qualify as a “hotel” under Georgia laws (I don’t know if it technically does)…
Are you certain that you are not supposed to be collecting 7% sales tax from all of your guests - then you remit the amount on their behalf?
I didn’t have a chance to pull up the absolute latest changes in tax law but some services/sales are not exempt from sales tax in Georgia. I only read one from 2015 or prior and it said “sales of accommodations in GA are not exempt from charging sales tax” - but I do realize laws can change the following week.
I contacted the someone in the local guvmint and she referred me to the website for Collection of Local Taxes on which it is stated:
"Hotel-Motel Tax: Each month the over 20 hotels and/or motels in Athens-Clarke County collect and remit a 7% occupancy tax to the Finance Department.
I saw somewhere else there that a hotel/motel is defined as any place that has 6+ rooms. As far as I’m concerned, I don’t think I have to pay by their own definition. I pay income tax to the fed and state. That’s enough. Let them try and collect. Heck, I’d be willing to bet that some of the folks that do collect are just pocketing it.
I’m including it in my listing details and will go pick up a receipt book tomorrow. Thanks for the tip cabin!