I'm a little confused about the tax situation. Anyone else?
Here's my example:
I live in Portland and we rent our house on Airbnb when we travel (we live in the house most of the year). Does anyone know how much I should calculate to save toward taxes from our earnings? I'd like to know the percentage of how much we pocket, and how much we pay out for taxes.
$118 x 4 nights = $472
Cleaning = $75
AirBnb Service Fee = $16
Total Payout = $531
Your guest paid $72 in Occupancy Taxes. AirBnb remits this on your behalf.
My take home is $472, less whatever I'm taxed for income. Does anyone know what that figure would be?
I understood that in Portland, OR taxes were automatically taken out of earnings, therefore I did not claim AirBnb at tax time. In my mind I'm thinking, 'Great, taxes are pre-paid!' However, I just received a notice from the IRS billing me for the oversight. Not an audit, but an adjustment. Bummer. I realize now that's just for Occupancy taxes, and hosts also need to claim earrnings for income tax. Right?
Yep, in some places they collect occupancy tax, and they'll reserve income tax if they don't have your SSN/Tax ID.
I set aside about a third of the Airbnb revenue for taxes, which is super-conservative (especially once I deduct expenses), but I'd rather have too much than too little ready to pay the tax man.
You've got the occupancy tax figured out, which is something that you don't have to worry about since Airbnb takes care of all of that for you. As for the amount that gets transferred in your account, that's considered income which you have to report at the end of the year when doing your taxes.
Basically, the rule of the IRS is, whatever money you have incoming, it has to be reported. If we bet each other $1 right now and you win, then I give you a $1 bill, that technically has to be reported in your taxes.
The amount you pay is based on your total annual earnings. Whichever tax bracket you fall under for your taxable income, that's the percentage that you'll pay. I agree with Allison, if you don't have an accountant or tax professional helping you out, over budget for your taxes and withhold 33%, put that in a savings account.
Make sure to also keep diligent track of all your expenses that goes into running the Airbnb. All of that is tax deductible and will incredibly reduce your taxable income at the end of the year.
If you are w-2 employee in the US, you can change your deductions to help cover the income taxes you need to pay. I also think you need to pay your quarterly for the ABB income that you receive. I would speak to an accountant for all this.
I am new to this as well, first time submitting my qtrly Transient Lodging tax form. They require 6% be withheld for occupancy taxes. I down loaded the report from airbnb for my 1st qtr earnings/taxes withheld and so on. But they are taking more than the 6%! SO I am confused on what earnings they are taxing? Help please
Schedule E in turbotax. Do it as if you are renting out part of your property. Based on that % figure out depreciation, property tax, WSG, power, Internet etc. those can all be deducted from the Airbnb income.