Does Airbnb actually submit to the IRS? (below threshold)

[Donna51]

Dear US hosts, I'm trying to sort this out with Airbnb Help, but given some recent interactions, I'm not confident I'll get a timely or satisfactorily-comprehensive response.

In a conversation this week with the IRS, I was surprised to learn they have *no record* of anything from Airbnb for the last few years, in terms of income related to my room rental. (I have a W-9 on file with Airbnb.) While I don't meet the current threshold of $20K+/year and thus don't receive a 1099 from Airbnb, by law, they're required to report income. RIGHT?

Part of the reason I'm asking is that I read somewhere that what Airbnb reports to the IRS includes their service fees, which hosts are then able to deduct, since that wasn't actually income to the host. I don't know if this is true but that's part of what I wanted to find out, in comparing my Earnings Summary with what the IRS shows. Which, at the moment, is apparently nothing. ???

I'm curious if this has been anyone else's experience or if I'm missing something.

thanks,

Donna

[Mike-And-Jane0]

@Donna51 I think it is the hosts service fee that Airbnb include in a host's income not the guest service fee.

[Lisa723]

@Donna51 regardless of whether Airbnb reports to the IRS, your reportable income includes the host service fees, which you also deduct as a business expense.

I would not expect them to report to the IRS when they don't send you a 1099. How they get away with this, I don't know. I have to send a 1099 to everyone I pay at least $600.

[Michelle53]

@Lisa723  You probably issued a 1099-MISC or 1099-NEC. Airbnb issues a 1099-K for payment processors. Currently, this threshhold is $20,000 and 200 transactions. There's a new law changing the threshhold to $600 and no minimum number of transactions,  effective in 2022 for the 2023 tax filing season. 

https://www.pwc.com/us/en/services/tax/library/american-rescue-plan-act-lowers-form-1099k-reporting-...

[Lorna170]

@Donna51   You may want to have a chat with a tax professional or the tax office for your county.  

If you were to receive a 1099 from AirBnB for the income generated by your rental property, it would include the amount that AirBnB collected from the guest as a service fee as well as the amount of money that was charged as a host service fee for the credit card processing.  1099s show all income, including money that was later reimbursed.  When reporting your gross income to the IRS, those two service fees can be deducted on your schedule E, along with a lot of other expenses, thus the need to converse with a tax professional.

Inasmuch as the IRS does not show any income or payments by AirBnB for your property, Air does not report by each owner and each property.  They send an all-inclusive payment.  That is why I file a monthly report with my state, county and municipality detailing my earnings and the amount of taxes that AirBnB has collected from my guest and should be sending to the tax authorities, with me owing zero additional taxes.  If I get audited, I have a paper trail that the IRS can take up with AirBnB.

[Lisa723]

@Lorna170 

Interesting. I assume you know that the guest service fee is included because you have received 1099s from Airbnb? Guest service fees do not appear in the earnings summaries that Airbnb generates for me, or any transaction reports, so I would not have any way to know or report that amount-- but I don't get a 1099.

[Lorna170]

Yes, when I have had multiple properties earning income under an OTA, I have received 1099s that were far in excess of what I was paid.  I was able to ascertain (with the assistance of my accountant) that the 1099 reflected all income earned, inclusive of security deposits that were charged and subsequently refunded and any fees charged to the guest by the OTA, etc.  That is why I do not rely on reports from the OTAs when doing my tax reporting.

When I have a guest, AirBnb will display the fee that I will receive, the taxes that the guest was charged, the  service fee that AirBnB charges the guest as well as the deduction for the host service fee.  I track this information on a simple excel spreadsheet so that I can complete my monthly tax report of gross earnings  and taxes paid (by AirBnB on my behalf) to my State, County and municipality.  I use the same simple spreadsheet to complete my federal taxes.   

[Lisa723]

@Lorna170 you are doing all this data entry manually for each reservation by copying from the reservation details screen???

[Lorna170]

Yes.  For years.   It has been worth every minute of my time, and my records are more accurate than any report from an OTA.  

[Lisa723]

@Lorna170 if I tried that I'm sure the records would be much less accurate.  😉  I just download Airbnb's (and others') transaction records and send them to our accountant. These include, and we report, host service fees and not guest service fees.

[Lorna170]

@Lisa723   I beg to disagree.  In past years, when I have received 1099s, the income reflected on the 1099 included the guest service fees that the OTA charged the guest to rent my property.  Been doing this for more than 20 years with multiple properties and multiple OTAs.

[Lisa723]

@Lorna170 you disagree with what? I just reported what I do and and what appears in the Airbnb reports that are available to me. These are facts.

[Lorna170]

@Lisa723   What I disagreed with was your implication that the record keeping that I do would be much less accurate.  I find the OTA reports to be grossly inaccurate because they do not consistently report all of the income that is reported on a 1099 or the amounts that have to be reported to various tax agencies.  If you are happy with your method, that's GREAT!  I am quite happy with mine.

[Lisa723]

@Lorna170 I didn't mean to imply that. I meant only what I said, that I'm sure I wouldn't be able to do it without clerical errors. I don't doubt that you can.

[Donna51]

@Lorna170 - wow! Thank you. I had no idea they didn’t submit by owner! That does seem crazy. How would the IRS ever know whether I have income or not (below the $20k threshold)?!?

Seattle requires me to file quarterly for occupancy/excise taxes but that’s a total amount, not broken out by guest with taxes collected.
This feels overwhelming, honestly. Not sure what to do next.

But I do appreciate all the knowledge you - and others - are sharing.

(Also, I hope all is well in North Kackalacky - my old home state!) 😊