How to report AirBnB income on your U.S. tax return
Do I have to report the income?
If you are an AirBnB host wondering how to report the income on your tax return, the first question should be --- are you required to report it at all?
- U.S. Citizens/GC holders - If you are a U.S. citizen, you must report worldwide airbnb income on your U.S. tax return.
- Non-U.S. Persons - If you are a non-U.S. citizen, and you do not meet the substantial presence test (ie - required to file form 1040 as a U.S. resident) - then you only have to report the U.S. AirBnB listing income.
Where do I report this income?
For most casual AirBnB renters, the income received would constitute Rental Income, and reported on Schedule E of your tax return.
If you not a casual renter, but instead are in the real estate business or treat your AirBnB as an actual hotel/motel business and provide maid services, serve coffee, etc - you would be considered to engage in “active participation” - this would be considered Self-Employment and reported on Schedule C of your tax return. Note - unlike Schedule E, Schedule C carries potential self-employment tax (SECA).
What kind of expenses can I deduct?
It is important to keep accurate records of your expenses throughout the process. Here are examples of documents you should keep receipts for
- Receipts for all deductible expenses, including supplies, cleaning services, etc.
- A log of how many days a property is rented, used for personal purposes, or vacant
- Receipts for each repair and improvement including date and amount paid
- A log of travel expenses allocating between rental and non-rental purposes
- If many properties, accurate division of expenses between properties.
- If U.S. mortgage, Form 1098 or other form indicating mortgage interest paid
- Property tax forms and receipts
- Proof of tax preparation fees paid in relation to rental property
In general, if you think you can “deduct” it on your tax return, keep a record of it.
How will the income be taxed?
Schedule E (rental) income is taxed at ordinary income rates for Federal purposes. The net rental income after expenses will also be included in your US State tax returns.
If you are engaged in self-employment business (Schedule C) you may be subject to self employment tax in addition to income tax.