Whether you use Schedule C or Schedule E to report your Airbnb rental depends on how actively you are involved in running your Airbnb business and what services you offer. Use:
- Schedule C - If you provide services, like a hotel or B&B would (cooking, cleaning
services, maid service etc).
- Schedule E - If you are just renting out a
space and you do not offer any additional services.
The main difference between these schedules is that under Schedule C you are subject to self-employment tax and under Schedule E you are most likely subject to
Passive Activity Loss Limitations, which means that your rental deductions cannot exceed your rental income. In other words, the IRS assumes you’re never running at a loss. If you’re not, then you can deduct up to $25,000 regardless of your income.
Most taxpayers chose to report Airbnb rental activity on
Schedule E. To enter the rental on Schedule E in TurboTax Home & Business, please follow these steps:
- Click on Business > Continue
> I'll choose what I work on.
- On the screen, Let's gather
your business info, click Start/Update next to Rental
Properties and Royalties (Sch E) [See Screenshot #1, below.]
- On the Income from Rentals or
Royalty Property You Own screen, click Yes.
- If you have already entered
information about your rental (or transferred it from the previous year),
you will come to the Rental and Royalty Summary screen. Click
on the Edit box next to the property. [Screenshot #2]
- If you haven't yet entered
any information about the property, you will see a screen, Is This a
Rental Property or Royalty? Mark the button for Rental
property and enter information about the property.
- Continue through the screens,
entering the requested information.
If you are using Schedule C or a different version of TurboTax let me know and I can provide instructions specific to that version.
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