The Best Tax Checklist for New Airbnb Hosts

airbnb tax checlist

As a new Airbnb host, you will be responsible for saving for taxes along with other regulatory requirements. Before you open your area to your future guests, you might want to think about the tax implications before you start hosting. Below is a tax checklist for new Airbnb hosts.

Tax Checklist #1: Follow Local Short-Term Rental Regulations

Every municipality is different and has differing rules regarding who does and does not need a business license. Typically, the function of any Airbnb space is comparable to a bed and breakfast. Your guests usually stay for 30 days or less, and you may provide some food and cleaning services. You need to understand your zoning laws and respective responsibilities.

Tax Checklist #2: Check Homeowner Associations and Bylaws  

Sometimes tenant organizations have strict rules on short-term rentals so you should definitely check on this. It’s also important to think about parking and other short-term conveniences for your guests. You should always respect your neighborhood rules. Noncompliance with local HOA and related regulatory rules can result in an eviction or worse.

Tax Checklist #3: Pay Transient Occupancy Taxes  

Transient Occupancy Tax (TOT) is commonly referred to as Hotel Taxes. These are authorized by your city or county code. Some towns require Airbnb hosts to charge guests with transient occupancy taxes, just like hotels. Hosts need to submit the proper forms and fees to the city on their own. Recently, Airbnb started collecting TOT in certain cities. See our blog here for a sample list of cities that require TOT. Always check with your local authorities for the most up-to-date information regarding TOT procedures.

Tax Checklist #4: File Form W-9 with Airbnb.  

If you don’t submit a W9, Airbnb withholds 28% of your earnings for the government. You can avoid this by submitting the W9 tax ID form. Once you submit the paperwork, you get all of your money. However, you still have to pay hosting fees and applicable taxes.

Tax Checklist #5: Maintain Organized Records

This is a must for any new business. Start with an organized model from the beginning because it will save you major headaches later. If you ever run into audit issues, you’ll need this information to defend yourself. It might seem unnecessary at first, but proper expense tracking makes you a better host and business owner. You should have an organized financial system in place before you book your first rental.

Tax Checklist #6: Track Business Income and Expenses

This ties into organizing your records, but it deserves extra emphasis. Deductions are a big part of your tax planning strategy, so it’s extremely important you track them correctly. You’re only selling yourself short if you don’t. Maximize your tax savings by tracking every business-related expense. This helps you reduce your tax bill and protects you against the wrath of the IRS in case you get audited. If you’re not sure whether it’s a deduction, track it anyway. You can always consult with a tax pro later.

Tax Checklist #7: Talk to a Tax Advisor

This is the most important item on the list. If you’re unsure how rental income will impact your tax situation, it pays to talk to a professional. The IRS might want you to pay self-employment taxes on your rental income, or you might have to make quarterly estimated tax payments. Talk to a pro to make sure you know what you’re getting into. At Shared Economy Tax, we specialize in servicing short-term rental hosts, so we’re happy to help if you’d like to chat. Just set up a free one-on-one consultation here, and we’ll gladly answer all of your Airbnb tax questions. You can also sign up for our free tax tips newsletter using the form below.  

About the Author

Miguel Alexander Centeno

Miguel Alexander Centeno is an author, speaker, and tax leader at Shared Economy Tax. A former Big 4 tax manager, he represents taxpayers in all matters before the IRS, including the U.S. Tax Court. He has been quoted in the Wall Street Journal, Fox Business, and MSNBC on tax related articles and has testified before the U.S. House of Representatives as a part of hearings for the Tax Cuts and Jobs Act. A father of three, Miguel is an avid acoustic guitar player, gravel cyclist and once-a-week yogi.
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