Hey kids -
Trying to get my taxes filed. Do you guys do Schedule E or C? And how do I deduct my local Transient Occupancy taxes that I pay to the city?
I’m using TurboTax, and I’m about to lose my mind. Thanks for any help!
There isn’t one right answer. I use Schedule C mostly because I typically have rentals less than 7 days. Here’s a useful flowchart type guide:
https://www.hrblock.com/tax-center/wp-content/uploads/2018/05/airbnb-taxes.pdf
That’s not counted as part of your income. Look carefully at your income info on Airbnb and you’ll see that’s the case. So it’s not deductible.
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I used schedule C but Airbnb takes care of the occupancy taxes for me.
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E or C, depends. Technically you cannot use E if average length of stay is 7 days or less, many tax service providers don’t know this. You might be required to provide that information in the course of a review or audit.
The tax is neither an income nor an expense item. You are merely the middleman collecting it for the government, so you wouldn’t report it on your taxes at all. That being said, if you have a 1099 from a platform that includes it (i.e., if you roll it into your overall rate), counting it as income and some sort of expense, so it’s a wash, will get you to the same bottom line and not create a calculation issue.
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AirBnB takes taxes out, but apparently they don’t go to the city of Charlottesville, who still want their 8%.
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This flow chart is awesome. Thank you! I may just switch to HR Block. Turbo tax is pretty useless on this stuff.
I use Turbo Tax and have since I started Airbnb in 2014. I can’t recall what guidance they provided me to use Sch. C but there you go. Someone else posted this on another thread so I can’t really take credit.
But yeah, HR Block may be better for Air hosts.
I wonder how many other people think that their taxes are all set and they are not really going where they should. Given the number of countries, states, provinces, counties, municipalities and special area designations that require tax, I don’t know how any company can keep track of it.
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You need to figure out exactly what Airbnb is taking out. You could be paying taxes twice!
In some localities, AirBnB collects and remits occupancy tax in bulk. I.e. they collect it for all bookings in the jurisdiction and remit it as one lump sum to the tax authorities. They don’t report it on behalf of a specific individual. This is how it works where I live. I need a transaction privilege tax license to do business, and I have to report the taxes due from my business, but I also report them as already paid. Honestly it’s stupid. There’s no use in Airbnb collecting them for me if I have to go through all of the same trouble except for the money transfer. However, the reason the cities/counties do it this way is because they know that too many people would never report or pay the tax.
Why I’m glad that Air charges them and sends the money to me, since my city wouldn’t allow Air to bulk pay. State law requires that tax charges and payments be auditable. I just put the payments sent to me in a holding account and use it to pay quarterly sales and room tax.
If you’re in Charlottesville, VA, what Airbnb is adding on and remitting for you is the the 6% Virginia sales tax. The 8% of the gross receipts you are responsible for collecting and remitting is the Charlottesville Transient Occupancy Tax (just like a hotel pays).
I just saw this! Yes - you are exactly right. That is the deal. But they are somewhat deductible.