Airbnb sends 1099 to property manager

[Aquitaine]

I have contacted Airbnb (and VRBO for that matter) regarding this. I am waiting for a response. Airbnb's website allows for selecting different taxpayer information depending on the payout method, but if you have more than one owner you're collecting income for, that doesn't help. With some of the suggestions here the SAME income would be showing up on two income statements (and tax returns), the manager's and the owner's. It cannot be correct to show income on your taxes that's not yours. The 1099's should be going to the owners. 

[Carl]

Here's a scenario that could apply here, which would not only be problematic, but could have the potential to flag and audit.

AirB&B collects the income. From that gross income AirB&B takes their cut and sends the rest to the property manager.

Then the property manager takes their cut and sends the rest to the property owner.

If AirB&B sends a 1099 to the property owner for the amount they paid to the property manager, it's possible that the property manager will also send a 1099 to the property owner for the amount they paid to the property owner. This means that the 1099 from the manager will include the income already reported on the 1099 from AirB&B. So the property owner is reporting a little more than double the income they actually received. While this can be "dealt with" by the property owner on their own tax return, I would fully expect it to create a much greater audit risk with the IRS. While such an audit would probably work out fine, it can (and most likely would) be a hassle for the property owner to deal with to final resolution.

[M-MTax]

I don't get ANY of this because AirBnB or VRBO is ONLY going to send a 1099 to the person or company THEY PAID. They're not going to send a 1099 to anyone they didn't pay....that would be improper and wrong and not necessary.

If AirBnB or VRBO pays the property manager....IN FULL.....and sends a 1099 to the property manager ALL the property manager has to do is deduct the payment to the OWNERS on SCH C. Then the property manager can send a 1099 to the OWNERS for the amounts they were paid. It's not that tough to figure out.

[Critter-3]

@M-MTax   AMEN

[Michalanne]

I am a property manager but I do allow all of the payments from Airbnb to go directly to the owners. I then bill them accordingly each month for the percentage agreed upon as well as all of the cleaning fees. From my limited understanding, Airbnb should then be the one issuing the 1099 to the property owners. They would then deduct my charges as an expense. I would then record only the income that I received. I would then not need to issue them a separate 1099. Does this sound correct?

[janna7]

That is a work around for sure; however that would take me way more time.   With our software, we collect all income and pay all the expenses, take out our fee then send remainder to the Owner.   AIR BNB will 1099 us and we 1099 the owners. 

[DanielV01]

@Michalanne wrote: 

 

I am a property manager but I do allow all of the payments from Airbnb to go directly to the owners. I then bill them accordingly each month for the percentage agreed upon as well as all of the cleaning fees. From my limited understanding, Airbnb should then be the one issuing the 1099 to the property owners. They would then deduct my charges as an expense. I would then record only the income that I received. I would then not need to issue them a separate 1099. Does this sound correct?

Yes, but you will want to make sure that Airbnb is actually issuing the 1099 to the owner and not to you.  And there could be a need for the owner to send you a 1099 to report amounts the owner paid you, particularly if the amounts are above $600 for the year.  Just FYI.

[Aquitaine]

It makes sense to collect the money, take out all the expenses and send the remainder, especially because you don't have to worry about the owners not paying their bills. And it certainly appears customary to do it that way. I've run the issue - having to record income that isn't mine - by a TurboTax Expert, plus a TurboTax CPA. They both understand the dilemma but unfortunately had no solution.  Apparently, Airbnb as of 2022 will issue 1099s for all funds disbursed, so you are forced to record a potentially immense amount of "income", that, if properly accounted for, wouldn't even show up on an income statement. It's a balance sheet item - the money collected is just a deposit. Only the fees are the property manager's income. Yes, it matters... I would very much appreciate feedback from some users, who also understand why this is a problem.