Do I Report Airbnb Income on Schedule C or E?

This all depends on the number of services provided and the frequency of the interaction with Airbnb and the money will be taxed as either sole proprietorship on Schedule C of your income tax return or as partnership on Schedule E.

• Use Schedule C: If you operate like a business, offering substantial services like meals or daily cleaning.
• Use Schedule E: If your rental activity is passive, involving only basic services like providing furniture and utilities.

 

Key Differences Between Schedule C and Schedule E

Aspect	Schedule C	Schedule E
Type of Activity	Active business operation	Passive rental activity
Level of Involvement	High (daily management, services)	Low (basic rental management)
Self-Employment Tax	Applicable	Not applicable
Typical Services Provided	Cleaning, meals, concierge	Basic utilities, occasional repairs

 

When to Use Schedule C for Airbnb Income

Use Schedule C if:

1. Short-Term Rentals: You lease out properties for a few days and there is a change of occupants often.
2. Substantial Services: This include services such as meal provision, cleaning services on daily basis or concierge services.
3. Active Business: You actively manage and market the property as a business.

 

When to Use Schedule E for Airbnb Income

Use Schedule E if:

1. Minimal Services: You only provide utilities, furnishings, and occasional maintenance.
2. Longer Rentals: Rentals are longer-term (more than seven days per guest).
3. Passive Income: You are not materially involved in day-to-day management.

 

 

Common Airbnb Income Scenarios and Their Tax Forms

Scenario	Example	Report On
Occasional Host	Renting out a room a few weekends with no extra services.	Schedule E
Full-Time Host	Renting daily, offering meals and cleaning services.	Schedule C
Mixed Use	Offering short-term rentals with services seasonally.	Split (C & E)

 

Frequently Asked Questions About Reporting Airbnb Income

 

1. What if I provide both basic and substantial services?

Split your income: Use Schedule C for the active portion and Schedule E for passive income.

2. Are Airbnb service fees deductible?

Yes, you can deduct service fees as either business expenses (Schedule C) or rental expenses (Schedule E).

3. What taxes apply to Schedule C income?

Schedule C income is subject to self-employment tax (15.3%) and federal income tax.

4. Do I need to pay local occupancy taxes?

Yes, many states and cities require collecting and remitting local lodging taxes.

 

Need guidance on reporting your Airbnb income correctly? Contact us for tailored advice on whether Schedule C or E fits your rental situation!