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TCC 12
Level 1

AirBnB side business

My wife and I started renting out a newly built casita on AirBnB this summer. We are keeping records of all of our rental records as well as expenses. How do we add this to our taxes??

1 Best answer

Accepted Solutions
SarahB01
Employee Tax Expert

AirBnB side business

Hi TCC 12,

 

Congrats on your new adventure, that's exciting!

 

AirBnB income and expenses will typically be reported on your personal tax return on Schedule E (rental income). I am assuming you didn't start any LLC etc with your wife. Only under very specific circumstances would AirBnB be reported on a Schedule C (business income). 

The only time AirBnB should be reported on Schedule C is when significant services were provided. Think about it as a real bed and breakfast. If you are serving breakfast, actually make the bed every night, provide meals, clean the room daily, change and clean the towels for the occupant etc, then the income may be considered subject to self employment tax under IRC 1402.

 

Under all other circumstances, the income would be considered rental income, regardless of length of stay. Length of stay only determines whether or not the activity is a rental activity for purposes of IRC 469 (passive income) which matters when determining the treatment of losses,  but doesn't determine whether or not the income is subject to self employment tax under IRC 1402 (schedule E versus schedule C).

Turbotax will ask you the necessary questions in order to report your income and expenses on your tax return. You can go to 

1. Federal

2. Wages and income

3. Rental properties and income

 

Make sure to enter all assets accordingly so you depreciate the property as needed. More information about depreciation can be found in this link: 

Rental property depreciation 

View solution in original post

3 Replies
SarahB01
Employee Tax Expert

AirBnB side business

Hi TCC 12,

 

Congrats on your new adventure, that's exciting!

 

AirBnB income and expenses will typically be reported on your personal tax return on Schedule E (rental income). I am assuming you didn't start any LLC etc with your wife. Only under very specific circumstances would AirBnB be reported on a Schedule C (business income). 

The only time AirBnB should be reported on Schedule C is when significant services were provided. Think about it as a real bed and breakfast. If you are serving breakfast, actually make the bed every night, provide meals, clean the room daily, change and clean the towels for the occupant etc, then the income may be considered subject to self employment tax under IRC 1402.

 

Under all other circumstances, the income would be considered rental income, regardless of length of stay. Length of stay only determines whether or not the activity is a rental activity for purposes of IRC 469 (passive income) which matters when determining the treatment of losses,  but doesn't determine whether or not the income is subject to self employment tax under IRC 1402 (schedule E versus schedule C).

Turbotax will ask you the necessary questions in order to report your income and expenses on your tax return. You can go to 

1. Federal

2. Wages and income

3. Rental properties and income

 

Make sure to enter all assets accordingly so you depreciate the property as needed. More information about depreciation can be found in this link: 

Rental property depreciation 

TCC 12
Level 1

AirBnB side business

Thank you very much, exactly the information I needed!

SarahB01
Employee Tax Expert

AirBnB side business

You are so very welcome, this is a great question and I am glad to resolve. Good luck!

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