We rent 2 rooms in our home and in our first year of hosting we made a decent amount, at least better then we expected considering where we live, $12,000+. It’s our primary home and it’s definitely not a vacation home, but we’ve rented the rooms well beyond the 14-night maximum - some guests have stayed as many as 20 nights! Our city does not collect room or accommodation tax from Airbnb listings - many people in our city are unfamiliar with what Airbnb even is. Since it’s our home, we don’t track all the expenses like it’s a business - why would we? Most of the income goes back into the house own way or another, such as utilities and small renovations projects we’ve done. But am I to claim the 1099-K income on my personal return? How have others who rent their personal homes handled this kind of income? I don’t want to skirt my civic responsibilities - I consider myself a Social Democrat - but I also don’t want to open Pandora’s Box with the IRS. Thanks!
You won’t receive a 1099 unless you’ve earned over $20,000.00 and had over 200 reservations.
https://www.airbnb.com/help/article/414/should-i-expect-to-receive-a-tax-form-from-airbnb
I declare my Airbnb income on my tax return. I deduct a percentage of the utilities (the percentage that the guest room is of the house plus a bit extra as guests have access to the common areas), anything I buy specifically for Airbnb (linens for the guests, mini containers of toiletries, etc.), a reasonable amount for things we buy for the house that guests use (cleaning supplies, toilet paper, shampoo, soap, coffee, etc.).
You should probably declare it as schedule E… passive rental income. You may be able to deduct expenses. Some CPAs advise it be a schedule C, but you really need to show you meet certain BnB criteria like daily room service or serving breakfast.
But don’t take my word for it. Consult a professional CPA!
I would say the reason to track all expenses is because, whether you recognise it or not, your are running a business. You are providing a service and people are paying for it.
Thanks for the feedback!
Download a Schedule E and instructions from IRS. Depending on your circumstances, you may be able to deduct passive losses (say if you bought new stuff for the airbnb this year, did some work on it, etc. in excess of your income minus supplies, airbnb fees, TP etc.) It’s complicated but the form will walk you through it. Look at schedule C (sole proprietor business) if your rentals average 7 days or less, or you provide meals or touring advice. Check with an accountant, as recommended above, if you are form and numbers averse.
You should collect and remit sales and accommodations tax for every booking. Or eventually, …as the regulations get tightened from town to town, you could be out in the cold. Check into your town regulations, and also see if there is a local advocacy group.
Your property taxes MIGHT be affected depending upon the rules where you live. Here, over 70 nights = a different rate for that SF of the the property.
You might have income tax to declare.
You certainly have expenses to deduct.
How does one “collect” taxes from guests? There is not tax collection mechanism through Airbnb. And to whom do I send the taxes? Just send a check to the city? There’s no formal process. They’re likely to send it back.
are you in Mass ?
and
I agree that @Josiah has a big learning curve. However, your other statements may or may not be correct.
There are different kinds of taxes the two major ones being hotel occupancy tax and income tax. Not everyone needs to submit occupancy taxes. Not every AirBNB needs a business license. Not everyone needs a TaxID for their business.
if @Josiah made money we in 2016, and has filed taxes for that year, and didn’t include income from their AirBNB, they will need to file an amended return. [And, you will really hope that you can find your receipts for direct expenses.]
I think your original question was about income taxes.
If your jurisdiction or municipality requires it you should also be collecting your local accommodations, lodging, excise taxes, etc. For this you need a license.
I get them in cash from the guest. It’s the easiest way. I don’t just spring it on them. I disclose it a million ways in the listing, when they book, giving them the amount, and then when they check in I get it from them then.
People are used to paying lodging taxes. I simply say, the collection of tax is mandatory, non negotiable and due on arrival in cash. Please have xx amount ready.
Have only had people push back once or twice.
I’ve been filing my own taxes for over 25 years. And the last 7 years I have been fling my partner’s tax returns as a sole proprietor. If there’s a learning curve, I’ve gone around it multiple times. There’s no where at all to enter 1099-K income. It’s implied that it’s already recorded in sales income, so there’s no where to record it my personal return. I am not a sole proprietor, and Airbnb is very different business than my partner’s business. I guess I inadvertently raised two issues: Is it personal income or is it business income? And if I am “sole proprietor,” the lines btwn personal and business are a but blurred. Seeing that no one else seems to be in the same situation as me, I will just proceed as usual, file the 1099-K in my file cabinet and pretend I didn’t “make” and money this year. Problem solved. 
PS: Income taxes are different than room and accommodation taxes. Since no one seems to want to collect either, I guess Airbnb is a good business venture.
A 1099-K is reported on a Schedule C.
I’ll give it go this year. See what happens.
Or Schedule E if you are more passive.
Let’s avoid giving advice like that on the forum. It’s different for every person’s situation. My CPA says no schedule C for me. But it might be different if you qualify due to other factors.
I’m no CPA, but this should be basic for all of us…
You have to claim that income. You should NEVER NOT REPORT it just because Air doesn’t send a 1099 for under 20k.
I totally don’t understand what you mean by this. I’m fine with collecting TAT and GE. These visitors to our island use our roads, parks, airports, emergency services, and infrastructure. I pay plenty of taxes. Why should they get off scot free using a service like my room and not pay taxes?
And oh… until this morning, when the GOP passed this atrocity of a tax reform bill and the senate is expected to follow momentarily, these state and local taxes were deductible. Not now apparently!
Make America even more Unequal than before!
By “no one,” I meant local, state or federal gov’t. Since I am not a business, nor a sole proprietor, and there’s nowhere on my personal return to list 1099-K income, I’m at a loss. The more I ask, the more I think my Airbnb listing is very different than everyone else’s. It’s not a vacation destination, it’s my home, and hardly anyone in my community has ever heard of Airbnb, it’s a bit of an oddity. I am more than willing to pay my fair share in taxes, or impose that guests pay theirs, but I am not a tax collector. I don’t know that I am looking for tax advice, but more for what other people have done in similar circumstances. But it seems mine is unique. I’ll play around on TurboTax and see what happens. Perhaps tax laws have not kept up with the sharing economy.