Updated: Nov 16
Recently a client brought up the concern that AirBNB and VRBO were incorrectly reporting their rental income. I thought of sharing a tip to all similar owners because I want you to thrive in your endeavor and not let compliance cause you IRS penalties.
First let’s be very clear: You are required to report all your rental income whether or not you receive a 1099 or not. But who exactly receives a 1099?
You will receive a 1099 if:
1. You have at least $20,000 in total revenue
2. And you have at least 200 transactions
If you have $30,000 in total revenue but only 100 transactions, you won’t get a 1099.
But here is the problem. If you simply just report the net amount that you receive from VRBO/AirBNB you are understating your gross revenue and are in non compliance.
For example, if you rent your AIRBNB house out for $2,000 but after AirBNB/VRBO commission, refund transactions, taxes and other fees you only receive $750 net in your bank account.
You need to manually go in and figure out how much fees were so you can report on your tax return
Gross Rental Income: $2,000 (this is the how much you list your property)
MISC Fees/Expenses: $250
Net Received: $1,750 (this was deposited into your bank account)
Please be careful not to make this reporting mistake!
You also don’t want to understate your rental income.
We've got your back when it comes to bookkeeping or tax matters. Connect with us at 205-216-5481 or drop an email. We're here to help!