Tax Preparation Tips and Guidelines for Your Airbnb

How do you report Airbnb income on your tax return? This is one of the biggest questions that new Airbnb hosts face. Professional Airbnb hosts that are earning significant amounts of money from the platform should be proactive in Airbnb tax preparation, so that they aren’t blindsided by Airbnb taxes when April rolls around.

Do I Have To Pay Airbnb Taxes on Airbnb Income?

The short answer is yes unless you rented your house out for less than 14 days AND used it more than 14 days yourself. If you did rent it out for less than 14 days, and you don’t pay taxes on it, you also can’t take any deductions. Regardless, Airbnb and other short-term rental platforms will require you to fill out IRS form W-9 to receive full payouts without any withholding. Airbnb will only issue you a schedule K if you received more than $20,000 for that calendar year. However, even if you don’t receive a schedule K form from Airbnb, you still owe taxes on the income.

One disadvantage of short-term rentals is that you might also have to pay taxes to your county or city for short-term rentals. This may come as a surprise to you when tax time rolls around and you’ve missed 3-4 quarterly payments! If you haven’t purchased your first rental yet and are considering doing so, be sure to do your research. Taxes could have a huge impact on whether or not your property will be profitable.

How Should I Track My Airbnb Expenses?

If you have more than one property, we recommend using Quickbooks to keep track of all your Airbnb taxes & deductions. It will link up to all your bank accounts that you have associated with your properties, automatically separate the expenses by property, and even categorize the transactions for you! When you use Quickbooks for all of your accounting, you can just invite your accountant by sending an email invitation and then they can download all your transactions and easily prepare your return.

If you only have one property or don’t want to pay for any software, we strongly recommend using a spreadsheet to track all your expenses. We have a free spreadsheet that we include a link to in our welcome email that is received after signing up for our mailing list on the sidebar. It includes the common tax categorizations as well as a feature to keep track of expenses for multiple investors!

What Common Airbnb Tax Deductions Should I Look For?

Employees and independent contractors

• Cleaning service, management, spa maintenance staff
• Handymen, electricians, and plumbers
• Landscapers and gardeners
• Roofers, carpet layers, and painters

Airbnb tax deductions for short-term rental property

A host is allowed to deduct any reasonable expenses used in the conduct, maintenance and managing of her rental properties. That includes:

• Utilities
• Taxes (including local occupancy taxes!)
• Necessary and reasonable repairs to the property
• Travel costs incurred while doing business

What Are The Airbnb Taxes For A Private Room?

If you don’t rent out the entire property, and you rent one or more private rooms for more than 14 days out of the year, you will have to do some math to share the expenses with those for your personal use. This is where you benefit from having an accountant who can help calculate Airbnb tax deductions.

How Do I Handle Vacation Rental Tax Preparation for Other Platforms?

Airbnb competitors will send you similar documents. It could be in the mail, but most platforms offer online reporting. See how we handled our taxes this year in our Year in Review post.

Should I Attempt To Do My Own Airbnb Tax Preparation?

We strongly recommend against doing your own Airbnb tax preparation unless you only have one property. If you only have one property, it should be pretty easy to enter all of your income and deductions into an online tax preparation service such as TaxACT.  H&R Block has been able to link right up with Quickbooks Online accounts and input all expenses for each property very quickly. They know exactly what questions to ask, and what Airbnb tax deductions you might be missing. We cannot stress enough how important it is to use a professional for Airbnb tax preparation.