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How to File 1099 Airbnb Taxes
How to File 1099 Airbnb Taxes
Platforms like Airbnb and Vrbo transformed the travel and lodging industry over the last decade. Maybe you’ve thought about renting out your home for some extra cash, but the thought of managing taxes keeps you from pursuing this path. Or maybe you've started Airbnb-ing your home already, and you're putting off finding out what your tax obligations are.
Whether you offer your home to travelers, manage a rental property or offer tour options using the Airbnb platform, navigating new tax rules and regulations can be like traveling to a foreign land. The rule of thumb is that you will have to pay taxes on any Airbnb income, and here's how.
Key takeaways:
- Airbnb hosts need to pay taxes on Airbnb income
- Form 1099 is sent to Airbnb hosts and service providers that meet certain criteria
- There’s a Airbnb tax loophole that can help you avoid paying taxes
Table of contents
How is Airbnb income taxed?
Whether you’re renting out a room in your home a few times a year or committing to long-term rental of your vacation home, the money you make from renting is considered taxable income. You’re required to include the Airbnb income on your tax return and you’ll need to file Schedule E along with Form 1040.
Airbnb can withhold income taxes for you, but you’ll need to file a Form W-9. Once you submit this form to Airbnb, the company is required to withhold 24-28% of your rental income and submit this to the IRS.
Reporting income for Airbnb taxes
Whether you consider yourself an independent contractor, freelancer, self-employed individual or part of the gig economy, as an Airbnb host you’re in charge of reporting your income and filing taxes. The IRS considers Airbnb hosts to be nonemployees, meaning you’re also responsible for paying SECA taxes.
When you work for an employer, they cover 50% of SECA taxes. As a nonemployee, you’re considered to be both the employer and the employee, meaning 100% of the tax falls on your shoulders.
Airbnb income tax and 1099s
Independent contractors typically work on a contract basis and are paid for the services they provide. A client is required to report payments made to you on a 1099 form, if the payments are $600 or more. One copy is sent to the IRS, and the contractor should also receive a copy by mail or email in early January.
1099 forms are used to report payments to independent contractors to the IRS, and contractors can also use them to compare their records of how much money they received during the year, along with the type of income they received.
If you have 200 or more bookings, or earn $20,000 during a calendar year as an Airbnb host, expect a Form 1099-K from Airbnb. Airbnb service providers that make $600 or more need to report their income on Form 1099-NEC.
If you don’t receive a 1099 from Airbnb, it doesn’t mean you’re exempt from paying taxes on the income. Airbnb might not have your most up-to-date information, or the form got lost in the mail, and you still need to report income over $600. Also, receiving a 1099 from Airbnb doesn’t always mean you need to pay taxes on the amount listed there.
Self-employed business deductions can lower the cost of taxes on Airbnb income that you earn. More on that later. To find out how much Airbnb tax you truly owe, you can use a 1099 tax calculator.
The 14-day rule for taxes on Airbnb income
If you’re looking for an Airbnb tax loophole, look no further. A special rule allows you to not have to pay Airbnb income tax or even report the income on your rental property. The IRS explains the rule on its website in Topic 415, a sort of tax guide for short-term rentals.
If you regularly rent out your guest bedroom or basement suite, you wouldn’t be able to take advantage of the Airbnb tax loophole.
If your home is in a prime location for a popular event, like Times Square in Manhattan, you can rent out your home to someone wanting to watch the ball drop on New Year's Eve and rack up some serious cash. Or, if you happen to live in the location of the Super Bowl in a given year, you can become an Airbnb host and earn cash on a one-time rental to a die-hard fan. If you’re going on your own vacation, you can rent out your home during that time, as long as it meets the loophole criteria.
Deductions for Airbnb hosts
When you’re self-employed, you can save on taxes by taking those business deductions we mentioned earlier. The catch is that you’ll need to keep track of your expenses for when it comes time to write off the deductions from your annual income tax and file your tax return. You can use an app like FlyFin for this and manage your expenses and your income, too, all in one place. No need to keep track of receipts or use spreadsheets. Instead, A.I. finds every possible deduction, saving you time and money. You’ll never miss another business deduction or pay the IRS more than you need to again.
Common tax deductions for Airbnb hosts:
- Cleaning services
- Subscription services: Netflix, Hulu, HBO, etc.
- Advertising costs
- Airbnb service fees
- Property insurance
- Mortgage loan interest
- Utilities: electricity, gas, water, wifi, etc.
- Property maintenance and landscaping
- Bed and breakfast items: coffee, toiletries, food items, etc.
Airbnb income and VAT
Value-added tax, or VAT, is an indirect tax that’s charged at each step of the supply chain. Some countries impose a VAT tax system instead of charging sales tax. You may need to include VAT in your charges for the services you provide, if you live in a country that imposes a VAT. This includes countries that are part of the European Union, as well as China, South Korea and Latin America.
If a country charges tax on electronically supplied services, Airbnb is legally obligated to collect VAT on the service fee. This includes all countries in the European Union, Iceland, Mexico, Saudi Arabia, Switzerland, South Africa, Uruguay, Columbia, Chile, Norway, Mexico and Albania.
Any Airbnb renter from China is also required to pay VAT on the service fee.
Dealing with taxes on Airbnb rentals isn’t as daunting as it might initially seem. With the right knowledge and tools, you can turn your property into rental income and start achieving your financial goals.
What’s FlyFin?
FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors.
But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology.
Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes.
In addition, you can download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and money.
Expert tax CPAs ensure 100%-accurate tax filing
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