BEWARE!! Inaccurate IRS Reporting on Air BnB 1099's

[Maureen-And--Peter0]

We recently deduced that the amount AIRBnB reports on our 1099s is not in fact the income we earn every year. This has brought us a lot of confusion, trouble and expense by needing to re-figure our actual income and have our CPA amend our tax returns over the last 3 years.

We are disappointed that the amount AirBnB reports to the IRS includes the host fees they  collect from guests. This is money we never see. It is AirBnB's income, not ours. Why do they include this?

We were also dismayed to discover that when guests cancel or are given refunds after check-in AirBnB does not subtract this amount from what they report to the IRS. Why? Certainly their program can subtract these amounts from host's income.

Be sure you are accurately reporting your income to the IRS NOT the amount on AirBnB's 1099s!!!

[Mike-And-Jane0]

@Maureen-And--Peter0 Does your CPA agree that the guest fees should not be reported by the host (as revenue and expense?). Presumably the host fees (3%+VAT) are included in revenue (and costs)? I have always worried whether or not to include the guest fees especially as they become host fees if you switch to the host only service fee model. 

[Lorna170]

@Mike-And-Jane0  My accountant has me tally the guest fees -- because the USA 1099 will report the GROSS monies processed on behalf of the host and the property, we tally everything and then my accountant can assign it to a category on the USA Schedule E.  The fees that the guest pays AirBnB go into the "Management" category on my expense spreadsheet.  Likewise for the taxes collected from the guest and (ostensibly) paid on my behalf by AirBnB.

Because I keep meticulous records relating to the property, the amount shown on my 1099 does not freak me out and I can correctly report my actual income as received.

[Lorna170 · Accepted solution]

@Maureen-And--Peter0  1099s are designed to report the GROSS amount of monies that are applied to a property.  So it is going to include the service fees paid to AirBnB on behalf of the property, fees paid and refunded to guests who cancel, etc.

Any amount of money that is processed for a property is included in the 1099 GROSS. 

It is a total PITA to reconcile, which is why I keep a spreadsheet of every guest rental, cancellation or refund, all of the taxes collected from the guest, the fees that AirBnB charges the guest and the host, etc.  Then I have a good chance of matching the amount shown on the 1099, and my accountant can readily assign expenses to reach the amount that I DO report as income.