2016 is over and we're thinking about taxes. This is our first year to report Airbnb rental income, and one issue has me thinking...
I'm wondering how to handle the Host Service Fee that Airbnb deducts from every transaction. In our Transaction History, Airbnb points to Gross Earnings as "useful for income tax reporting purposes." But Gross Earnings do not reflect actual payouts and thus they don't reflect actual earnings.
We'd love to hear from anyone who received a 1099-MISC from Airbnb last year. Did the reported amount reflect Gross Earnings (without the Host Service Fee deducted), or did it reflect Net Earnings (the actual amount you were paid)?
I'm hoping Airbnb doesn't report Gross Earnings, because that's not an accurate reflection of host income. And writing off Host Service Fees is not as beneficial taxwise as simply not having to report that money as income in the first place. I
Thanks for any input you can provide.
Carl and Diane
@CarlandDiane0 If you go to the Help Center and look up taxes, you will find a link to the Ernst and Young statement about tax deductions etc. Thought it was helpful. I haven't recieved a 1099 as yet but the transaction history does reflect payout, which of course is less host fees.
Thanks @Linda108 The E&Y article does explain these issues well. After reading that report and after thinking this through a bit more -- and once I saw that Airbnb issues 1099-K statements -- I realized why it makes sense for Airbnb to report it the way it does:
Thanks for your help in clarifying this. I was completely misreading the situation and creating a problem where there wasn't one. (Or so Diane has informed me.)
Happy New Year!
Carl and Diane
As of last year, AIRBNB does not distribute a 1099 unless your earnings are over $20,000.
They issued a summary statement that I used to file for 2015 federal income taxes.
I cannot find a statement by AIRBNB as to when these statements will be available.
Can someone please explain why "Host fees" are considered part of "Gross Earnings" on the Airbnb year end report?
It seems more logical to me that "Host Fees" are an expense item which the host can declare on US tax return. The gross earnings would be the sum of the "pay out" column.
@Deb27 Perhaps since different countries have different tax laws, gross earnings include all monies associated with your profile. I do think the article by Ernst and Young is very helpful for the US hosts. Did you see that?
I used the Schedule E rental income reporting method (so used the Rental Properties section of the Wages & Income menu) then reported the AirBnB host fee in the "Management Fees" item of the expenses section. Note that if you use the TTAX feature that allocates expenses (e.g. utilities, prop tax, etc.) based the percentage of you home used for rental purposes, then you should go into TTAX "forms mode" and check the Schedule E worksheet in the "Expenses" section and change the default percent used in column b to be 100 for those expenses which should not be pro-rated (for example the cleaning and maintenance fee if that should be applied in total for the rental portion). TTAX already assumes the management fee should apply at 100% (so you'll see that number is already in column b). If there are other expenses that should apply in total, or with some percentage other than the default, then enter the corrected percentage for them too,