The advantage to reporting your income as a Schedule E is that there is no self-employment tax. Schedule E is how almost all rental income is reported. That’s a lot of tax for a rental, so you want to avoid a Schedule C if possible.Īirbnb Schedule E (Passive Rental Activity) (20% income tax + 15.3% self-employment tax = 35.3% total tax rate times $20K). If you’re in a 20% income tax bracket, you will have to pay a total of $7,060 in tax. Schedule C Example: Let’s say you make $20,000 net profit from your Airbnb in 2021. The taxes are much worse for a Schedule C because you have to pay income tax and self-employment tax (15.3%). Some examples are side-hustles like part-time freelancer, or rideshare driver (Uber / Lyft). Trade or Businesses are reported on a Schedule C. Here are the key differences between the two:Īirbnb Schedule C (Trade or Business) – extra 15.3% tax Depending on which one you have to use, you will pay the IRS more money. There are two (2) different ways people report their Airbnb rental. The most common question I get regarding Airbnb Taxes is, “how do I report it on my tax return?” How should I report my Airbnb on my taxes? Airbnb Schedule C or Schedule E

However, if you want to run your Airbnb all year, you’re going to have to report it to the IRS. The rental days do not have to be a consecutive (back-to-back)Ī lot of people use the 14-day exemption when big events, like the Olympics, come to their town.Even if you rent it out 1 day longer (15 days), you will have to report all your income (not just the extra day) You cannot rent the property out for more than 14 days.A personal residence is a home you use more than 14 days or more than 10% of the days you rented it out, whichever is greater The property must be a personal residence or your vacation home.So PGA Golf lobbyists stepped up and convinced Congress to pass this law.įor you to be eligible for the 14-Day Exemption, but you must meet certain conditions: A lot of homeowners were renting out their homes during the tournament and didn’t want to pay taxes. History of the rule is back in the 70’s in Augusta, Georgia there was an annual PGA Masters Golf tournament that drew in lots of people. This is an exemption sometimes referred to as “The Augusta Rule”. If you rent out your Airbnb (or any rental) for under 14-days, you don’t have to report the income to the IRS.

Airbnb Tax Strategies so it’s not a Trade or Business?ĭo I have to report my Airbnb to the IRS? (14-Day Exemption)īefore we get into the details of how much your taxes might be, let’s see if you even need to tell the IRS.When can I use Schedule E and not Schedule C?.How should I report my Airbnb on my taxes?.

Do I have to report my Airbnb to the IRS? (14-Day Exemption).

Sample 1065 tax return