In the current sharing economy, Airbnb has afforded individuals the opportunity to earn extra income by sharing their homes with travelers from around the world. On the downside, this extra income comes with additional tax obligations. And one of the key components of these responsibilities is the 1099 Tax Form. So, as an Airbnb host, understanding your tax obligations is crucial to maintaining a successful and legally compliant hosting business.
In this guide, we’ll break down the Airbnb 1099 Tax Form, including the 1099-K form Airbnb uses to report the income of its hosts. We’ll also explain other types of Airbnb tax forms, who receives them, and practical legal ways to maximize your deductions, lowering your taxable income.
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What is the Airbnb 1099 Tax Form?
The Airbnb 1099 Tax Form is a tax document issued by Airbnb to hosts who meet certain income and transaction thresholds within a tax year.
Which 1099 Form Applies to Airbnb Hosts?
There are several types of 1099 forms; however, the only 1099 forms that are relevant to Airbnb hosts are 1099-K, 1099-MISC, and 1099-NEC.
For Airbnb hosts, the relevant form is the 1099-K form. This form is issued by Airbnb to hosts or co-hosts who have earned over $20,000 and fulfilled at least 200 reservations during a tax year. The form reports the gross income received from renters, which includes the rental price as well as any fees for cleaning or other services.
The 1099-MISC form applies to hosts or co-hosts who have received other reportable income, such as bonuses, awards, incentives, Airbnb settled resolutions, or other miscellaneous payments. This also applies to luxury retreats. In this case, the minimum threshold is for those who’ve earned $600 or more during the tax year.
Finally, the 1099-NEC form applies to Airbnb service providers: these include photographers, translators, or any other service providers within the Airbnb ecosystem. Similar to the 1099-MISC form, the minimum threshold is for those who’ve earned $600 or more during the tax year.
Who Receives Airbnb 1099 Forms?
The Airbnb 1099 Tax Forms are issued by Airbnb to hosts who meet the specified income and transaction thresholds within a tax year. As a Third-Party Settlement Organization (TPSO), Airbnb is required by the IRS and state tax authorities to issue 1099 forms to U.S. tax residents or citizens who are Airbnb hosts. So, based on the amount you earn, your taxpayer information, the number of transactions, and specific state laws, Airbnb might send you one or multiple 1099 forms.
Criteria for Receiving a 1099 Form from Airbnb
- The Airbnb 1099-K form is issued to hosts or co-hosts whose gross income exceeds $20,000 and who have fulfilled at least 200 reservations during a tax year. However, the IRS recently announced that it plans to change the threshold to $5,000 for 2024. Note that the 1099-K form only reports the gross income received from renters.
- The 1099-MISC and 1099-NEC forms are issued to hosts and Airbnb service providers who’ve earned $600 or more during the tax year.
Airbnb 1099 Tax Form Exceptions and Special Cases
Although you are an Airbnb host, co-host, or service provider within the Airbnb ecosystem, there are some exceptions and special cases that could mean you don’t need to receive Form 1099 from Airbnb:
- Lower Earnings or Fewer Transactions: If you gross less than $20,000 or fulfill fewer than 200 reservations in a year, you won’t receive the 1099-K form from Airbnb.
- Payments to Corporations: According to IRS rules, there’s no need to issue 1099 forms to corporations. This means that if you’re an Airbnb host and you make payments to corporations for services like cleaning or maintenance, you typically don’t need to issue a 1099 form to them.
- Electronic Payments: Some electronic form payments are exempted from 1099 forms. This means that if you’re an Airbnb host and you make payments electronically, you may not need to issue a 1099 form.
- State-Specific Guidelines for Airbnb Hosts: In many states, Airbnb hosts are required to file state-specific information returns directly. These states may have thresholds and deadlines for reporting that differ from federal requirements. This can also vary depending on whether the state participates in the Combined Federal/State Filing Program (CF/SF). Furthermore, depending on the host’s location, they may be required to collect local tax or Value Added Tax (VAT) from their guests.
These are general guidelines, and the specifics can vary depending on your geolocation. Consult with a tax professional to get a better understanding of full tax obligations.
Tax Obligations for Airbnb Hosts
As an Airbnb host, you’re required to report all income generated from your hosting business as self-employment income to the IRS by filing a Schedule C (Form 1040) to report your business income and expenses at the end of the tax year.
However, the gross income you earn from your hosting is reported through the Airbnb 1099 tax forms. As mentioned, the 1099 forms provided by Airbnb report the total amount of rent collected during the year, including the nightly rate, cleaning fees, and any additional charges or fees.
Purpose of the Airbnb 1099 Tax Forms
The 1099-K form reports gross income, not net income, and does not account for Airbnb fees or refunds. As a host, you pay Airbnb fees per reservation, while any incurred refunds will be deducted from future earnings – not from the 1099-K.
With this in mind, in order to report business expenses you incurred during the year as an Airbnb host (fees, commissions), you’ll have to use Schedule C (Form 1040) to account for all expenses and offset your gross income reported in the Airbnb 1099 tax forms.
Deadlines for 1099 Airbnb Forms
The deadline for 1099 forms is at the end of January in the year following the eligible tax year. For example, if you’re filing for income earned in 2023, you should expect to receive your 1099 form from Airbnb on or by January 31, 2024.
Filing Airbnb 1099 as a Sole Proprietor or Business Entity
The process of filing your Airbnb taxes can vary depending on whether you’re operating as a sole proprietor or a business entity.
If you’re a sole proprietor, you’ll typically report your Airbnb income on Schedule C (Profit or Loss from Business) of your personal income tax return.
If you’re operating your Airbnb as a business entity, such as an LLC or corporation, the process is different. The income from your Airbnb will be reported as part of the revenue in your business tax returns. Note that the specifics can vary depending on the type of business entity and location.
Deductible Expenses for Airbnb Hosts
All business expenses you incur in the course of running your Airbnb are deductible expenses, which will lower your overall taxable income. Below is a comprehensive list of potential deductible expenses for Airbnb hosts:
- Mortgage interest
- Rent – if you’re renting the property you list on Airbnb
- Utility costs
- Property insurance costs
- Property taxes
- Cleaning fees – if you pay for cleaning services
- Repairs and maintenance
- Supplies – including toiletries, linens, or kitchenware for your guests
- Airbnb service fees
Tips for Maximizing Deductions Legally
To maximize the above deductions legally, be sure to follow these steps:
- Keep detailed records of all expenses you incur, no matter how small
- Familiarize yourself with the relevant tax rules and regulations, including knowing what expenses are deductible and how these deductions are calculated. And make sure you’re staying up to date with all regulatory changes.
- Always consult a Manay CPA tax professional to get tailored solutions to your specific situation.
Common Mistakes to Avoid as an Airbnb Host
When running an Airbnb business, your goal is to maximize your net income, and that means maximizing your deductibles and avoiding any penalties from the IRS. Here’s an overview of some of the most common mistakes to avoid as an Airbnb host.
- Not Reporting All Income: Always accurately and exhaustively report ALL forms of income you’ve earned through Airbnb hosting.
- Misunderstanding the 14-Day Rule: Some hosts mistakenly believe that if they rent their property for less than 14 days in a year, they don’t have to report the income. Although this is accurate, the 14-day rule only applies to your primary residence, not to a separate property that is rented full-time.
- Overlooking Deductible Expenses: The easiest way to lower your taxable income is to ensure you don’t miss any deductible you incurred in running your business, including the fees charged by Airbnb.
- Not Keeping Accurate Records: Failing to keep records can make it difficult to accurately report your income and calculate your deductions. Always track your expenses truthfully and accurately.
To stay tax compliant as an Airbnb host, ensure you are familiar with your tax obligations – and the Airbnb 1099 tax forms play a crucial role in that. We’ve discussed what it is, the conditions for you to receive it, and how you can file your taxes as a sole proprietor or a business entity.
While this guide provides a comprehensive overview of the tax obligations for Airbnb hosts, it’s important to remember that tax laws can be complex and change frequently. If you struggle to stay on top of all changes, you should consult tax professionals to ensure you’re accurately reporting your income and taking advantage of all eligible deductions.