1099-K from Airbnb Sent to Wrong Person

[KDS1723]

I host an Airbnb for my parents that rents about half the year.  I also airbnb my own house about 7 days per year (well under the 14-day rule).

Payments for my parents go to their bank account.  Payments for my house go to my bank account.  Apparently I was listed as the taxpayer (on a hidden, not-at-all-obvious page on the airbnb site) for all of these payments, so I received the 1099-K for everything!  As many people have discovered, Airbnb is completely unwilling to work with their treasured hosts to correct 1099-Ks.  

I have almost finished my parents' tax return and I recorded their airbnb income (of course without a 1099-K).  I am starting my tax return.  Here are the factors:

1) I need to enter the 1099-K income on my return since it has been reported that way and I do not want to get flagged.

2) I need to say that we rented our house less than 14 days so that I do not pay taxes on our portion of the airbnb income.  I'm afraid that this will prevent me from being able to somehow deduct my parents' (much more significant) portion of the income, because as soon as I say we're under 14-days turbotax will move me along to the next section.

3) If there is some way to enter and then deduct my parents income, how do I do this?  

4) And am I right that saying we rented under 14-days will prevent me from doing this?

Thanks!

[MonikaK1]

Contact the payer regarding any issues with your Form 1099-K. If they won't issue a corrected form, you can report the amount shown on the Form 1099-K in the Form 1099-K section under Other Common Income, select Real Estate Rentals as the type, then check the box "This amount in box 1a is too high or includes some personal transactions" and enter the amount that shouldn't be included in the box that appears. 

An alternative method is to report the full amount of the 1099-K in the 1099-K section, then enter the incorrect amounts as separate entries under Less Common Income, then Miscellaneous Income, then Other income not reported on a form. Report the incorrect items as negative numbers, and thereby deduct the incorrect income. That way, your income reported from a Form 1099-K will match what was reported to the IRS so that their matching system doesn't show a discrepancy.

There's a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don't report any of the rental income, and don't deduct any expenses as rental expenses. See IRS Topic 415 for more information.

See this IRS FAQ for more information regarding Form 1099-K.

See this TurboTax article for more information on 1099-Ks received for other than self-employment income.

[KDS1723]

Thanks, Monika,

Before I rec'd your message, I entered the 1099-K amount when "Easy Step" asked me about 1099-Ks. 

Then, in the rental income section, I entered my parents rental property description and under miscellaneous expenses I entered the portion of the 1099-K that should be on my parents' return.  There is room there to give a very brief description of what happened.    

I also entered the portion of the 1099-K that was legitimately mine as an expense, and briefly stated that it is not taxable under the 14-day rule.

So now the 1099-K is showing up on my Schedule E, but all of the income is reversed through these two "miscellaneous expenses."  Does this sound good?  Sounds similar to what you described.  The 1099-K is reported by reversed and explained!  Anything else I should do?

[ThomasM125]

What you describe is acceptable. The IRS will match the income on the reporting form to the income reported on your schedule E and it will not appear unusual to not have net income from a rental activity, as a loss or no net rental income is common.