You do need to report the total income that the property generates. Then deduct the management fees and other charges that the property manager keeps from the proceeds. The property manager should be issuing you a Form 1099-MISC reporting the total rent received.
Short-term rentals are considered to generate passive income. However, based on the work that you do for the rental property, you are considered to be active participants. This means that you may be able to use some of the losses from the rental to offset income that is not passive income. You do have to have an Adjusted Gross Income below certain thresholds to quality as you mentioned.
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