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Unemployment benefits for Airbnb hosts (U.S.)

Hi all, I read in an Airbnb Facebook group that Airbnb hosts can qualify for unemployment benefits under the CARES act which expands unemployment to include self-employed individuals and freelancers. Airbnb even mentions this on their site: https://www.airbnb.com/resources/hosting-homes/a/federal-covid-19-economic-relief-resources-for-us-hosts-169

I hadn’t thought of applying for unemployment benefits to cover my Airbnb losses because I’m currently employed, but am wondering if anyone knows the details of how a host could qualify for this? Would Airbnb have to be a host’s sole income? Would I have to have filed my taxes on a schedule C rather than schedule E? Has anyone here gotten unemployment benefits under the CARES act for their rental income?

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Hi GardenFairy,

I saw that too and it looks like you can apply for a SBA loan/grant, which you don’t have to repay if you use the money for payroll, utilities, mortgages. I was curious if there is anything else out there besides applying for unemployment benefits under the CARES Act? What are other hosts doing about filing for loss of income due to the COVID 19 pandemic?

Thanks!

You need to check your state’s Unemployment Insurance web site, usually located in your state’s Dept of Labor/Workforce/Human Resources/AnotherTrendyName.

States got the details of the program for self employed just a week ago, and they all have to write new software to collect the relevant info from applicants and allow them to register. Since I was a maintenance programmer 23 years ago on the Alaska Unemployment Insurance system, I can tell you that setting up the online application form and all the underlying software and databases is not a trival task, and for my state will probably take at least another week. Since I own a one person tour business as well as the AirBnB, I should be able to apply based on both businesses.

If you’re currently employed your income is probably too high to qualify for unemployment, so applying for an SBA disaster loan may be better for your situation. For that, you need to talk to your bank. There are also forbearance programs for mortgages with Fed guarantees for which you need to talk to your mortgage servicer.

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To apply for Unemployment in every state that I know of (and have applied in), you would have to be totally unemployed, not just losing some income from your “hobby” business of STRs.

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If Airbnb was your main source of income and your present job gives you less than a certain amount a week and you work less than 4 days a week. Then you may qualify for unemployment .
It will be a very long wait time to get through unemployment benefits website . It can’t handle so many applicants . I won’t be surprised if it takes 2-3 months to get first payment .

Ken, you’ve applied for unemployment in every state you know of? :rofl:

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Yup – pretty much!

I spent my working career as a Technical Writer. We were the first to get laid-off every time there was a hitch in the economy. Colorado, Utah, Arizona, Oregon, Kentucky, Florida that I can remember; I think there were a couple more…

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I’m wondering the same thing, does filing a Schedule E make us ineligible to file for unemployment benefits? AirBnb was my sole income as I am in school.

If your stays average less than 7 days, you should NOT be filing a Schedule E. This income is reported on a Schedule C. Look up gig economy on irs.gov website. https://www.irs.gov/businesses/gig-economy-tax-center

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Schedule E income is passive income, which will most likely not qualify you for unemployment. If you are operating a business (as you say Airbnb was your sole income) and your stays were averaging less than 7 days, this income should not be reported on Schedule E. Please speak to a tax professional. You may need to amend your applicable returns.

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This article I found helpful although it is Illinois-centric:


Particularly this general information, which describes how the Pandemic Unemployment Assistance will use formulas from the existing Disaster Employment Insurance law:

“The DUA uses tax returns if available:
‘The base period to be utilized in computing the DUA weekly amount shall be the most recent tax year (2019) that has ended for the individual prior to the individual’s unemployment that was a direct result of the major disaster.’
‘The self-employment income to be treated as wages for purposes of computing the weekly amount…shall be the net income reported on the tax return.’
If you didn’t file your 2019 tax return yet, then you will need to provide documentation substantiating self-employment and wages earned.
Iowa and New York (two state unemployment agencies currently accepting self-employed applicants) are asking for 2019 1099 statements in the absence of 2019 tax returns.
And since all state unemployment offices are expected to follow the same guidelines, it’s a good idea to have your 1099 statements and other wage documents ready to upload on the IDES site.”

So, if you filed your 2019 taxes using Schedule C or if you have not yet filed but earned enough to get a 1099 from Airbnb, it may ease your application process. You might even be able to make a convincing case using an Airbnb earnings report if you did not make enough to get a 1099. If using a 1099 or other documentation, you should then, at the time of filing, be using Schedule C, not Schedule E. This presumes that Schedule C is the correct form (7 or less days average stay OR 30 days or less + significant personal services); you don’t get to choose which form you prefer to use.

If you have been erroneously filing with Schedule E all along (7 or less average STR stays), I agree you should file amended returns. It may seem like you should just switch to the correct Schedule C going forward, but the problem is a history of unpaid self-employment tax.

Schedule C filers generally pay self-employment tax, and there could be a conclusion that you owe back self-employment taxes plus interest, etc. This is a bit of a grey area as the tax rules in my opinion have not quite caught up with STR reality. The guidance not to use Schedule E if stays average 7 days or less is explicit, but the only additional guidance I have found is that the filer is then directed to use the “appropriate” forms, not Schedule C specifically. I note that IRS is more humane than you may expect for honest mistakes; penalties for failing to pay self-employment taxes may be waived if you make good. This is one reason to have your taxes prepared by a professional; their name will also be on the return and they will, in their own interest, want to correct any filing errors.

I have read some accountant analyses that a host who was renting 7 or less days on average but could argue they are not providing significant personal services (cleaning, meals, transport, tours) could back out the self-employment tax on the Schedule C (similar to the process for a notary public). This is certainly an attractive way of thinking as it avoids a 15.3% tax hit on one’s Schedule C earnings, but personally, I wouldn’t try it. It seems the rationale for the short average stay exclusion is that it would be presumed to be similar to a hotel or B&B commercial operation.

Not a professional tax opinion, for discussion purposes only.

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The discussion of whether to use the Schedule E vs Schedule C is a whole other topic, but I have been filing my taxes with an accountant and use Schedule E, mostly because I am not providing any additional services. But I know this is a hot topic of debate among hosts.

Airbnb has a good document on their website prepared by an accounting firm regarding this and other tax topics. https://assets.airbnb.com/eyguidance/us.pdf
I don’t remember whether I knew about the 7 day rule when determining what form to use, but my accountant has ever asked me about my average length of rental. Either way, I get a fair number of rentals 7-30 days in length, so I would estimate my average length falls outside the 7 day rule.

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Yes, for me it is a small portion of my income and I am not unemployed, so I thought it was odd that other hosts were posting this on Facebook as if we’d all qualify for it. Airbnb doesn’t even go into detail about it on their site despite mentioning that unemployment benefits are available for hosts (which I’m sure is so they don’t get into a legal mess by giving guidance outside their scope). I do have some friends who use Airbnb as a huge source of their income, so will keep an eye out for more information regarding potential benefits for hosts through unemployment, SBA grants, etc. My state is still working on developing the online application for the changes under the CARES act, so there’s not much available yet.

I am not sure if this extends to Canada. Personally it has never meant more to me income wise than a glorified part time job. This year will be pretty hairy, but not nearly as bad as is is or will be for others. So I count my blessings.

I don’t know if you are in the same boat, but my SPENDING dropped to a screeching halt. Seems I can get by on a lot less. Again, gratitude.

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The issue I foresee with Schedule C is if you are breaking even or have a slight loss due to depreciation, you would not have paid SE tax. (SE tax not required due to CARE act). Net income might be zero or negative. BUT, expenses are the same as always with reduced gross revenue. What I need unemployment for is to replace that gross so my loss is not huge. I’m not sure how this is going to play out on my unemployment filing, but I will update when I know.

Not true!! You can be partially unemployed and still collect unemployment. People are hurting and struggling to make ends meet so be careful what you post.

Which State are you in??? Not when I was working you could not be “partially unemployed” Certainly not in Utah, Colorado, Oregon, Arizona or Florida where I have been unemployed. Not unless there have been drastic changes to the statues in the past decade.

In some states you can get some unemployment benefits for being under-employed, but not in most states.

You too :wink:

However, some states have extended benefits right now due to covid that will cover people with reduced hours that don’t usually provide them. For example, Utah is one of those states @KenH.

You guys are both right (and wrong).

Here’s a decent guide with links and breakdowns for each state.

Whether or not Airbnb hosts get unemployment benefits is not merely a “U.S.” discussion, it is going to depend entirely on the state you live in as it is a state program. The Feds can offer the money and suggest the programs but states don’t have to offer them. There are still states that haven’t signed the agreements necessary for people who are already on unemployment to receive the extra $600 a month from the feds.

And each state makes up their own rules and qualifications about most of it that it will be entirely different from state to state as to whether hosts qualify for unemployment. For most hosts who need some assistance, the small business programs are a better solution. Unemployment will be a long shot for most hosts.

There have been drastic changes to unemployment in the past month regarding unemployment for the self-employed (or we wouldn’t be having this discussion). It looks like I need to familiarize myself with my state’s changes. My wife and I run the Airbnb income under her business, but her main business (freelance translator) also started falling off last week and completely dried up this week. She’ll have money coming in for another month just because her clients tend to pay after 4-6 weeks, but it’s not looking good. There’s also the possibility of clients going into bankruptcy and never paying (as happened in 2001 and 2008).

Edit: I just checked the Arizona Pandemic Unemployment Assistance page and they don’t have it implemented yet. They say to apply now and keep a record of your earnings.

As the DUA rules, which are supposedly being used for PUA, are based on “net income” for self-employed, it will be interesting to see how states using 1099 or other revenue documentation will process claims – perhaps they will ask applicants to estimate expenses/net income. It seems that hosts could still end up getting more than they netted previously when the federal $600 per week is added in, depending on the size of your STR income stream.
While noting that every state uses their own formula, our local NPR station posts:
“A good rule of thumb is you’re probably eligible if you’ve lost at least three quarters of your income, says Andrew Stettner, a senior fellow at the Century Foundation. You may even qualify if you still have a full-time job. The key is whether the public health crisis has directly caused you to lose the vast majority of your income.
‘It’s definitely worth trying to get the money,’ Stettner says.”

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