Taxes and income lost on cancellations

[Midge5]

I received a 1099 from Airbnb, does the amount on the 1099 only reflect income from nightly rates or does it include income from cleaning as well? Also, does it deduct the Airbnb fee of 3% from the gross earnings?

Also, I read somewhere that the gross income includes the full amount of cancelled reservations and that I would need to somehow figure out the "partial" amounts I refunded and add them as an expense on my taxes.

[Lorna170]

@Midge5   The 1099 is the gross earnings  attributed to your property.  That includes what you received per night, your cleaning fee, the 3% fee, the Airbnb fee, taxes paid, and any rents that were refunded.  The GROSS amount.  

[Midge5]

Hi Lorna, I just received an email back from Airbnb about this

. From this I believe the 3% is not included, you can deduct that as an expense on your tax return???

***
To my understanding, you have questions related to the amounts showing in your 1099-K form.
Though your gross earnings may or may not be taxable income on your U.S. Income Tax Return, the IRS requires that we report your gross earnings on any year-end tax statements we issue.
You can view those earnings on the Gross Earnings tab of your Transaction History; this link will work if you’re logged in to Airbnb: www.airbnb.com/users/transaction_history Clicking the ""Export to CSV"" link from the Gross Earnings tab will generate a different spreadsheet for you.

If you’d like more information on the differences between the net amount (shown on your main transaction history page) and the gross amount, feel free to check out this article in our Help Center: www.airbnb.com/help/article/416

As you know, from the gross amount you earn, Airbnb charges hosts a 3% fee, which covers processing costs, for every completed booking. So, for example, when a guest books with you for $100, your gross earnings are $100, and your payout is $97.

We’re unable to provide personal advice on how to account for your transactions or satisfy tax reporting requirements in your area— but we’ve partnered with Ernst & Young to put together a helpful guide for hosts: assets.airbnb.com/eyguidance/us.pdf

A local tax professional may be able to assist you further. If you’d like additional guidance on what amounts are included on your tax forms, here’s an article that might help: www.airbnb.com/help/article/182

If you have a guest whose stay extends between calendar months (ex: 21 July–3 August), your earnings for that reservation will be listed for the month when you get paid (24 hours after check-in).

I'm really sorry for any inconvenience this has caused.

Wishing you all the best.

Kind regards,

***

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**[Personal details removed in line with the Community Center Guidelines]

[Mike-And-Jane0]

@Midge5 The rep is being very clear. The 1099 gives the gross income which, as it says, is not necessarily your taxable income as you will be able to deduct the 3% fees.

[James2654]

Hi Midge;

RE: www.airbnb.com/help/article/182

This says to deduct the refund from gross to arrive at net earnings, but it doesn't say where to do this on one's tax return, and I see no way of doing it aside from calling it an expense (in other words, by lying).  This shouldn't take a visit to a tax specialist to get right. The're can't be many ways of doing it.. like report on Schedule X, line number 3.1415" or whatever.

[James2654]

Not so for those to whom Airbnb doesn't issue a 1099K.  All we get are these simplistic unofficial looking earnings summaries, in which our gross earnings for a given year do not include refunds for days not rented.  That in itself wouldn't be a problem, if Airbnb didn't also report those gross earnings to the IRS, which they assured me they do. And the large refund we authorized in June 2022  was not accounted for at all in our 2022 earnings summary, so it made our gross income artificially high.  And to make matters worse, we didn't find out till we started our 2023 taxes that they subtracted the June 2022 refund from our earnings in 2023, but from our total payout rather than our gross earnings!

Not only that, but in 2022, they took the liberty of excluding 4 stays and the income earned from those stays from our 2022 earnings statement, and then included them as rental periods and income earned in our 2023 earnings statement, even though those rental periods did not extend into 2023!

And try to get a straight answer from them that doesn't involve wading through reams of irrelevant cut-and-paste.. All I saw was a pile of what's and no why's, including some statement to the effect that they aren't responsible for how we report refunds. Technically. that may be the case, but they certainly are responsible for erroneously reporting refunds to the IRS as being earnings for periods not rented, and then erroneously reporting them as adjustments to gross income for the following year in which no refunds were given.  The IRS asks us to report the number of stays and nights rented within a given calendar year in our tax returns for those years, so why does Airbnb report them differently to the IRS?!

[Midge5]

Also, I read any cancellations are still added in as the full original reservation amount on your gross earnings for your 1099 and then I must calculate any lost income from the cancellations as an expense on my taxes. Is that correct????

[Kia272]

@Midge5 that is SO not correct. You can easily clarify many of your questions by simply taking a look at the numbers in your (wait for it.....) AirBnB account! 

A canceled reservation is not "lost income."

If the guest canceled and you were paid, you made income. If the guest canceled and you didn't get paid, you didn't "lose" anything. You just didn't make anything.

When you cancel a reservation at a restaurant, they can't claim that as lost income. 

In spite of AirBnB's many shortcomings, the numbers are available to you and abundantly clear by simply clicking on various options in the earnings area. The CSV download makes it very clear what you grossed, netted, etc. Why don't you try it? 

[Midge5]

Page 4 (highlighted in yellow) seems to me that you are incorrect. I would assume this applies to refunds on cancellations the same way.

Also, I have 11 listings and have almost 4000 reservations throughout the year, so it is not as simple as just looking at my transactions or earnings. I have a cancellation policy but sometimes I give a refund because of certain circumstances and that is also an added or deducted amount that I must incorporate into my gross earnings that is not included on my 1099 from what I am understanding from Airbnb.

[James2654]

YOU are so incorrect!

In June 2022 I had a guest leave after the first night of a 30-day stay, based on some paranoid delusional rant that he texted me about at 3AM about being afraid that the state would take his general contractor's license away from him if they found out he was staying in an unpermitted building. In fact, the place was fully permitted as residential living space and passed all inspections with flying colors – something anyone on the planet, let alone a contractor, could have discovered in minutes simply by entering our address into the county's permit search engine.  And when I did a search on him and the name of his renovation business on his truck, I found out that he wasn't, had never been, and still isn't a general contractor, and even if he had been, the licensing board later told me that they do NOT expect contractors to research the legality of their personal accommodations. 

ANYWAY, I called Airbnb right away and told them the situation, and authorized a full refund (as I would have had he simply told me is actual situation), but AirBnB insisted on keeping the full amount of his refund on my account as gross earnings, reported it on my earnings statement for 2022, and they reported it as gross earnings to the IRS. I had all of this verified twice by Airbnb.

Since I must report gross earnings on line 3 of Schedule E, then my only choice was to report the same figure that Airbnb reported to IRS in 2022. And it wasn't till the 2022 refund appeared on my 2023 earnings statement that I discovered all of this.  Up until then, I assumed that my earnings statements reflected rental income earned in a given year and that any refunds for days not rented would not appear as gross income.

And to make matters worse, they reported FOUR of my other 2022 rental periods (29 days worth) as being 2023 earnings, even though those rental periods did not extend into 2023, which is really screwing up my 2023 tax filing, because we deliberately ceased our rental activities in 2023 before the 30-day annual limit, because now that I'm collecting pension we don't need the extra dough and we wanted to get our homestead exemption back in place. But instead of getting an earnings summary that says we had a gross income of $2400 for 20 days of rentals, we got an earning summary that says we had a gross income of about $4500 for 49 days of rentals, and a 2023 payout of only about $640 that reflects 20 days rented in 2023, 29 days rented in 2022, and the large refund issued in 2022. As far as I've been able to determine from the massive pile of gibberish they threw at me when I complained, they only thing they report to the IRS is number of stays, number of nights rented, and gross earnings. As far as I can tell from IRS, there is no specific place I can deduct refunds from gross income, so I have to report it as some kind of expense, which could raise flags at the IRS.

Airbnb's refunds and reporting practices are totally bizarre and unjustifiable. The IRS asks hosts to report stays and days rented within the calendar year, so I don't see how Airbnb can justify telling the IRS that rental income earned within that calendar year was earned in a subsequent calendar year. 

Please correct me if I'm wrong.