A guide to Airbnb tax forms
- Sep 19, 2018 | Jennifer Sokolowsky
When you’re operating a short-term rental, whether it’s through Airbnb, HomeAway, VRBO, or another platform, tax obligations come with the territory. And with tax obligations come tax forms.
As a short-term rental operator, you’ll have two main types of tax forms to deal with: income tax forms and lodging tax forms. It’s important to make sure you’re clear on the difference between the two.
Income tax is paid directly by you to the federal government, as well as most state governments, once a year. The amount of income tax you pay is based on your total income for the year, including any income from short-term rentals, minus related expenses and other allowable deductions.
Lodging taxes, meanwhile, are assessed by states and local communities, including cities, counties, and special districts. They’re paid by the guest using the lodging and are a percentage of the total rent paid by the guest. Unlike income taxes, there are no expense deductions for sales and lodging taxes. As a host, you add the tax to the amount of the guest’s lodging bill, collect it from the guest, then remit it to the appropriate tax authorities. You don’t pay the tax out of your own pocket, but you’re responsible for making sure it is remitted to the government.
The total lodging tax amount you charge your guests can be made up of many different taxes from various jurisdictions. These can be sales tax and/or lodging tax, which can also be known as hotel tax, transient occupancy tax, bed tax, tourist tax, and more. The combination of taxes depends entirely on your location.
For example, in Nashville, NT, short-term rentals are subject to a Davidson County hotel occupancy tax, and nightly tax, which is collected by the county, while Tennessee State collects state sales tax, and county sales tax, on short-term rentals in Nashville. The point is there are usually several different agencies involved.
For help in figuring out which taxes apply to your short-term rental, use our lodging tax lookup tool.
Income tax forms
While you may already be somewhat familiar with the forms you’ll need to file income tax, there are a few that are unique to short-term rental owners to use for reporting your income. These include Schedule C, Profit or Loss From Business or Schedule E, Supplemental Income and Loss. Which form you use can depend on factors such as the kinds of services you provide guests. You may want to get professional advice on which form applies to you.
The IRS may consider you a “real estate professional” if you make more than half of your income from real estate-related activities, including short-term rentals, and you spend more than 750 hours a year working on your rentals. Real estate professionals have their own tax reporting forms and processes.
Another form you may come across is a W-9. Online rental platforms such as Airbnb, HomeAway, or VRBO may automatically withhold federal taxes for you unless you fill out a W-9 form. Filling it out allows you to reduce the amount of tax your platform withholds for you so you can get more of your earnings up front.
While you may be used to getting a form from other sources summarizing your yearly earnings, such as a W-2 or 1099, you shouldn’t necessarily expect to get such a form from your short-term rental platform. Many short-term rental platforms are classified as payment settlement entities and aren’t required to report earnings to the IRS unless a host has 200 or more transactions and makes more than $20,000 in a year.
However, you’re still required to report your income from short-term rentals to the IRS if you rent out your property for more than 14 days a year — whether or not your platform sends you a form detailing your earnings for the year.
Lodging tax forms
While Airbnb hosts may have to fill out a variety of forms for income taxes, they usually only have to fill out a couple of types of forms for lodging tax: tax registration forms and lodging tax returns.
Tax registrations and license applications
Before you can start collecting lodging tax from your guests, you’ll need to register with the tax authority in order to receive a tax license or account. This may be for sales tax, accommodation tax, or another tax assessed on short-term rentals. Remember that you may have to register with more than one tax jurisdiction — for example, with both the state and city.
In some locations, you should be able to apply for your tax account online. You may have to pay a fee for the permit, which will vary depending on the jurisdiction.
Keep in mind you may also be required to get a business license and/or short-term rental permit in certain locations. These are permits or licenses to engage in business and are separate from a lodging tax registration. To obtain a license you complete an application form, usually with the city, and often a license fee is required, which will need to be renewed annually.
Registration and licensing requirements vary widely across the U.S. In some locations you will only need to complete one registration form. In most locations multiple forms are required, such as a state form and a city a form. In some locations, like Florida, there may be four different registration and license application forms required.
Lodging tax returns
Once you’re approved for a lodging tax account or license, you’ll be ready to collect lodging taxes from your short-term rental guests and file your lodging tax returns.
Your completed lodging tax permit should offer information on filing lodging tax returns, including frequency (which can be monthly, quarterly, or annually) and deadlines for filing. Filing frequency and deadlines can be different for each jurisdiction.
It’s important to pay attention to your filing deadlines, as you may have to pay fines or penalties for missing them. In Tennessee, for example, the penalty for late filing is a minimum of $15, and that can grow to as much as 25 percent of the tax due.
Some jurisdictions may offer you a small discount on the amount of taxes due if you pay earlier than your deadline. South Carolina, for example, offers a discount of 3 percent of the total tax due if the amount due is less than $100, and 2 percent if the tax due is more than $100, for returns that are paid in full by the due date.
Filling out your lodging tax return involves provide information on how much you charged for your short-term rentals, either online or by filling out a paper form. You’ll also need to pay the tax amount due, usually via check or electronic transfer. Many jurisdictions allow credit card payments, but you may be charged convenience fees to cover the additional processing fees.
You’re required to file a tax return each period by the deadline even if you have no short-term rental income to report for the period. This is how tax agencies know you’re reporting no activity versus forgetting or ignoring their monthly tax filing requirements.
If Airbnb or HomeAway collects taxes for you
Short-term rental platforms Airbnb and HomeAway both collect lodging taxes on behalf of hosts in some jurisdictions. This may mean that you can fill out fewer lodging tax forms, but you need to know the specific requirements that apply to your jurisdictions.
In some cases, you’re not required to register for tax purposes or file tax returns if you use a platform that collects all the taxes for you. For example, in Cupertino, California, if Airbnb collects lodging taxes on your behalf, and you don’t use any other booking platforms, you’re not required to file regular lodging tax return forms since Airbnb is paying the tax on your behalf.
However, in Portland, Oregon, you still need to file regular tax returns even if your platform is collecting taxes for you and filing them on your behalf, but you can deduct the tax amounts paid by the platform on your short-term rental tax return. It is important not to report any taxes your platform may be paying on your behalf.
Keep in mind a platform may not collect all the taxes you owe. It’s common for Airbnb to pay a state tax, but not the city tax. You’ll still have to fill out all the required forms for taxes that are not collected on your behalf by the platform. This is a very tricky and often confusing aspect of rental management.
Getting help with lodging tax forms
Dealing with lodging taxes can mean you have to fill out several different types of forms for different jurisdictions each month. You can get help from MyLodgeTax, which can take care of all your lodging tax obligations for you, from registration to preparing and filing your lodging tax returns.