Airbnb hosts are always looking to increase their income, but what about expenses? As an Airbnb tax accountant, I always recommend that my clients focus on expenses, as well.
Managing your expenses effectively will improve your profits from your business and ensure that you have deductions you can claim at tax time. Here are my best tips on how to maximize your tax savings by using the services of an Airbnb tax accountant.
Save On Your Tax Or Pay Zero In Taxes
The best way to save on your taxes or even pay zero in taxes is to make your Airbnb income equal to your business deductions. As a result, you should claim every deduction that you’re entitled to, which can include ordinary business expenses, home mortgage interest, and more.
However, finding these deductions on your own isn’t always easy. You’ll need to review the IRS’s rules each year in order to check for new credits that may apply to you. This is why it pays to seek out the advice of an Airbnb tax accountant.
By selecting the right filing status, claiming all potential deductions and making smarter choices with regard to how you spend your Airbnb income, you could significantly reduce your tax liability.
Top Bookkeeping Tips For Airbnb Hosts
Reducing your tax liability starts with keeping track of your Airbnb income and expenses. You need to have full insight into how much you’re earning and how you spend your money if you want to save on your taxes or pay zero in taxes.
To help you improve your bottom line and prepare for tax time, here are my top 5 best bookkeeping tips for Airbnb hosts:
- Reconcile Your Income Data. As an Airbnb host, you should never solely rely on 1099’s for tracking your income. Instead, make sure that you reconcile them against your Airbnb dashboard sales report and bank account so that you know exactly how much money you earned and actually received.
- Setup a Separate Business Bank Account. Keeping track of your income and expenses is much easier if you can easily distinguish them from your personal expenses. It will also reduce the chances that your business deductions are disallowed by the IRS.
- Save Your Receipts. Make sure that you keep receipts and invoices related to business expenses that you’ve incurred while running your Airbnb business.
- Estimate Your Tax Liability Before Tax Time. It’s a good idea to hire an Airbnb tax accountant to work with you year round so that you can calculate your tax liability in advance. You may need to increase your business expenses before the year’s end which will, in turn, increase your deductions, lowering your tax bill.
- Go Over Your Bookkeeping. Meet with your accountant periodically to review your bookkeeping to ensure that you have accurately tracked everything. This helps you avoid tax errors or a situation where you have to scramble at the last minute to fix your books causing you to miss tax deadlines.
A Good Airbnb Tax Accountant Can Save You Money
Working with a good Airbnb tax accountant can help you avoid the pitfalls that Airbnb hosts often fall into when they do their taxes without the guidance of an accountant. Tax professionals know what’s not deductible and will ensure that you never miss a deadline.
Tax accountants can also recommend tax strategies that will save you money by lowering your taxable income and help you achieve your future financial goals.
Finally, accountants are required to stay on top of the latest changes in the tax code. By working with someone who is highly knowledgeable about taxes, you’ll be able to make the best choices about managing your income and expenses for your Airbnb business even as IRS rules change.
Contact us if you are interested in saving money on your Airbnb taxes.