GETTING PAID AND TAX TIME
Tax Information you Provide to Airbnb
Every Airbnb host with a U.S. listing is required to specify their U.S. tax status. Non-U.S. Airbnb hosts with listings outside the U.S. are not required to specify their U.S. tax status.
To specify your U.S. tax status:
- Login to Airbnb
- Click on your account profile photo in the top right corner
- Select Settings
- Select Payout Preferences from the menu on the left
- Click the Add taxpayer button under the Taxpayer Information
Below is a summary of each of the options you’re able to select:
Tax Forms Provided to You From Airbnb
Depending on your account status, the taxpayer information you’ve submitted to Airbnb, and other factors, you may receive a tax form from Airbnb. Below is a summary of the different categories to whom Airbnb will issue tax forms:
1. U.S. persons who have earned over $20,000 and had 200+ reservations
Tax Form Provided by Airbnb: 1099-K
Any Form 1099-K issued to you will be available in your Payout Preferences. You’ll receive an email notification when your form is ready, typically in late January of each year. Airbnb will also mail a copy to the address you provided along with your taxpayer information, unless you opted for electronic delivery only. You may receive more than one Form 1099-K if your taxpayer information is listed on multiple Airbnb accounts.
2. Non-U.S. persons who have submitted a Form W-8
Tax Form Provided by Airbnb: 1042-S
Hosts with U.S.-sourced earnings who have submitted a Form W-8 will be provided a Form 1042-S. Hosts receive a Form 1042-S in the mail at the address they entered when submitting their tax information, typically in late February of each year.
3. Hosts that had taxes withheld from their payouts
Tax Form Provided by Airbnb: Varies
If taxes were withheld from payouts during the calendar year (applies to both U.S. and non-U.S. hosts), these hosts will be provided with the appropriate tax form so that they may account for the withholdings on their income tax return.
If you received a request to submit your taxpayer information and haven’t provided it to Airbnb, they may be required to withhold 28% from your payouts and remit the withholdings to the U.S. Internal Revenue Service (IRS). You can avoid this by submitting your taxpayer information.
Once Airbnb receive your information, they won’t withhold from your future payouts (however, any amounts that have already been withheld and remitted to the IRS cannot be returned to you by Airbnb). The total amount withheld will be included on any tax forms issued to you so that you may account for these withholdings on your income tax return.
If you think you’ve submitted the wrong information, you can always make updates to the taxpayer information you provide to Airbnb. Airbnb encourage hosts to consult a tax professional for assistance in reporting their income.
Local taxes go by many names. Some of the more common ones are Occupancy Tax, Lodging Tax, Room Tax, Sales Tax, Tourist Tax and Hotel Tax.
It is a tax that is assessed and levied by a local authority such as a city, state or country. Not every locality will have applicable local taxes, however many do.
Where they exist, they typically apply to rentals of 30 or fewer days, and average 12% of the rental revenue. In many instances, hosts are required to register with their local city or county. Sometimes, a business licence will also be required before collecting local taxes.
It is therefore important to familiarize yourself with any local taxes that may exist within your area. The best way to do this is to check your city or county government website.
Airbnb take responsibility for collecting local taxes on behalf of hosts only in specific locations. Currently, these include France, India, Mexico, Netherlands, Portugal, Switzerland and the United States (with the exception of Delaware, Georgia, Hawaii, Indiana, Iowa, Kentucky, Massachusetts, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, South Dakota, West Virginia and Wyoming).
The Airbnb website has detailed information on the relevant local taxes it collects for each of these locations.
For hosts required to collect local taxes in any location that is not listed above, it is their responsibility to collect the local tax direct from guests themselves.
These taxes may be due monthly, quarterly or yearly depending on the governing area’s requirements. In some instances, filing of taxes, even in the absence of rental income, may be required for reporting purposes once registered.
If your listing falls within any of the jurisdictions previously listed, an “Occupancy Taxes” line item will be displayed on your Airbnb listing page:
If you are required to collect local taxes and do not live within any of the jurisdictions listed on the previous page, it is your responsibility to collect these taxes from your guests.
Hosts have three options for doing so, and it is at the discretion of hosts as to how they wish to collect these taxes. Their options are:
- Incorporating them into their listing’s nightly price
- Adding it to a Special Offer
- Asking guests to pay it in person upon arrival
Whilst the obligation is for the guest to pay any applicable local taxes, the onus is still on the host to remit these funds to the local taxing authority (when not collected by Airbnb on the host’s behalf). Regardless of the method elected, hosts are required to inform guests of the exact amount they will be paying in local taxes prior to booking.
In some circumstances, exceptions for reservations over a certain number of nights will eliminate the need to collect any relevant local taxes. You should research and familiarize yourself with any circumstances that might apply to you.
Value Added Tax (VAT)
Valued Added Tax (or VAT) is a tax assessed on the supply of goods and services. In Japan, Japanese Consumption Tax, or JCT, is applicable instead of VAT. In Australia and New Zealand, Goods and Services Tax (GST), is applicable instead of VAT. Depending on the laws of your local jurisdiction, VAT may also be included as a tax deduction in addition to the 3% service fee.
Airbnb charges VAT on its service fees for customers from Albania, Iceland, Norway, Russia, Serbia, South Africa, Switzerland, Taiwan, the Bahamas, and the European Union. In Japan, JCT will apply, and in Australia and New Zealand, GST will apply. If you live in one of these countries (where Airbnb charge VAT on their service fees), then VAT, JCT and GST rates are calculated according to the local rate of the host’s country of residence. Hosts from all other countries are responsible for self-assessing any relevant VAT that might be owed.
The service fee presented to you by Airbnb will include VAT when applicable. VAT or GST is deducted from your payout and is based on the total host service fee for a reservation. If you change your reservation, VAT or GST adjusts to reflect any change in the service fee.
A VAT invoice is provided whenever VAT is assessed on Airbnb service fees. An invoice is finalized and issued when a reservation is accepted, and includes your information (name, address, etc.) as you entered it in your Airbnb account. Airbnb is not able to modify a VAT invoice after it has been issued. To access the VAT invoice for your reservation:
- Login to Airbnb
- In Hosting mode, scroll down to Reservations on your hosting dashboard and select View all reservations
- Find the relevant reservation. If the reservation you’re looking for isn’t displayed, click View all reservation history
- Select View VAT Invoicesunder the Details column
- Select Host Invoice
If you have a VAT ID number registered with the European Commission, you may want to associate that number with your Airbnb account (this option is not available in Ireland). This will include your VAT ID on Airbnb VAT invoices created after the VAT ID is added.
To provide a valid VAT Information Exchange System (VIES) ID number for your account:
- Login to Airbnb
- Click on your account profile photo in the top right corner
- Select Profile
- Select Edit Profile (next to profile picture)
- Select Add VAT ID Number under Optional
- Enter your VAT ID number verification information
- Click Verify
- Click Save
When your VAT ID number is successfully verified by the European Commission, you won’t be charged VAT on Airbnb’s service fees. It nonetheless remains your responsibility to self-assess whether you need to pay VAT for the use of Airbnb’s services.
If your VAT ID number can’t be verified and you determine that you do need to self-assess VAT on Airbnb’s service fees, Airbnb encourage you to consult a tax advisor for assistance.
Tax deductions for Airbnb hosts fall into one of two categories:
- Full Deductions are expenses incurred solely for the purposes of running your Airbnb operation. An example is the purchase of linen for the bed in a room used exclusively for Airbnb guests.
- Partial Deductions are expenses incurred for the shared purposes and benefits of yourself and Airbnb guests. They arise in instances where an Airbnb dwelling is either rented out on a part-time basis (with you or others living there the remainder of the time), or where only part of your space is rented out (with you or others living in the rest of the space too).
The distinction in deduction type is important as it determines the size of the deduction you’re able to claim for individual expenses.
Below are some common larger expenses you’re able to claim as full deductions:
- Airbnb Host Fees: The 3% hosting fee you pay to Airbnb is entirely deductible. To determine how much you’ve paid in host fees login to your Airbnb account, go to Account Settings > Transaction History, Click on Export to CSV (in the top right-hand corner), and sum the amounts in the Host Fee column)
- Guest amenities: These include things like toiletries, spa products or anything you’ve provided for your guests to enhance their experience
- Guest bedding and linen: Among other hosting essentials, bedding and linen for guests is entirely tax-deductible
- Food for guests: Make sure that deductions claimed for food purchased for guests is separate from food that you’ve purchased for yourself
- Mileage for conducting Airbnb activity: If you manage multiple listings, or drive your guests places as part of your service (e.g. airport pick-up’s / drop-off’s) then these expenses will be entirely deductible. Check the applicable dollar-per-mile allowance that applies to your local jurisdiction.
This list covers some full-deduction expenses, but is far from exhaustive. Other fully-deductible expenses may exist for your listing. To determine whether a particular expense qualifies as a full deduction, use the test: Was the expense for the exclusive benefit of my guests and connected to the service I provide as an Airbnb host?
Remember selecting what kind of place you are listing when first setting up your listing? This was where you specified whether you were renting out your entire home, a private room or simply some shared space.
Partial tax deductions exist where the expense incurred provides benefit to both you and your guests.
Both the amount of space you rent out of your home as well as the amount of time you rent your home for will determine just how much of a deduction you’re able to claim.
There are three scenarios where partial deductions may be claimed. Here is a summary of the formula for each:
Let’s also take a look at how to determine the partial deduction that’s applicable for each…
1. Entire Home + Part-Time Rental
2. Shared / Private Room + Full-Time Rental
3. Shared / Private Room + Part-Time Rental
OTHER ARTICLES IN THIS SECTION: