Reporting Sales and Taxes in Minnesota

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Reporting Sales and Taxes in Minnesota

I'm just starting out and don't fully understand how to report sales and taxes to the State of MN when AirBnB is collecting and submitting taxes on my behalf. We did set up our AirBnB home in a business entity that does have revenue and should collect taxes.  I've been told to just report my gross sales with $0 in taxes, but that worries me.  I can't seem to find a way to see that the State has received the tax dollars for my sales.  Can anyone help provide insight on how you report your sales and taxes.

Top Answer
Lorna170
Level 10
Swannanoa, NC

@Jeffrey-And-Rachel0  

 

1.  My accountant advised me to file a "zero tax due" return each reporting period and to include a letter stating that the appropriate taxes were collected by AirBnB and other OTAs and paid by them on my behalf.  I keep printed copies of these returns in the event of an audit or being billed for non-payment of taxes.

 

2. The amount that I report on my taxes is the gross amount the guest is charged for the rental.  This includes the 3% service fee AirBnB charges me for the guest using a credit card for payment as well as the AirBnB 12-15% service fee that is never disbursed to us.  

 

3.  You will get NOTHING from AirBnB showing that X dollars in taxes were paid on your behalf.    I keep a very detailed spreadsheet of the amounts my guests were charged for taxes and service fees as well as the bank deposit emails detailing the amount I would be paid (later reconciled with the bank records).  I DO NOT rely on the AirBnB reports to provide accurate information.

 

4.  As we should be getting 1099s in 2023 for this income, realize that the 1099s will include the AirBnB fees we never receive as well as the amounts that would have been disbursed for cancellations, refunds, etc.  If there was a transaction related to our properties, i.e., a booking where money was paid to AirBnB, that will be reflected on the 1099, so keep track of everything, including cancellations that you were never paid for.

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1 Reply 1
Lorna170
Level 10
Swannanoa, NC

@Jeffrey-And-Rachel0  

 

1.  My accountant advised me to file a "zero tax due" return each reporting period and to include a letter stating that the appropriate taxes were collected by AirBnB and other OTAs and paid by them on my behalf.  I keep printed copies of these returns in the event of an audit or being billed for non-payment of taxes.

 

2. The amount that I report on my taxes is the gross amount the guest is charged for the rental.  This includes the 3% service fee AirBnB charges me for the guest using a credit card for payment as well as the AirBnB 12-15% service fee that is never disbursed to us.  

 

3.  You will get NOTHING from AirBnB showing that X dollars in taxes were paid on your behalf.    I keep a very detailed spreadsheet of the amounts my guests were charged for taxes and service fees as well as the bank deposit emails detailing the amount I would be paid (later reconciled with the bank records).  I DO NOT rely on the AirBnB reports to provide accurate information.

 

4.  As we should be getting 1099s in 2023 for this income, realize that the 1099s will include the AirBnB fees we never receive as well as the amounts that would have been disbursed for cancellations, refunds, etc.  If there was a transaction related to our properties, i.e., a booking where money was paid to AirBnB, that will be reflected on the 1099, so keep track of everything, including cancellations that you were never paid for.