In my last post, I talked about the tax ramifications of the rapidly booming shared economy phenom, Uber. The IRS has taken notice and is beginning to crack down on those involved with making money from the shared economy. Today, we will move to the vacation rental sector of the shared economy. The biggest player here is Air BnB, followed by other services such as VRBO, Home Away, and FlipKey. So how does it work? Let’s say you want to take a trip to Florida for a week of vacation…If you either feel that hotels are too expensive, or you don’t like the overall feel of hotels, you would opt for the shared economy option. Hosts list their homes or apartments on the website with the price per day, location, # of rooms and pictures. If you think it looks like a place you would like to stay, you pay them via the website and receive instructions from there.
So, if you are a host receiving money for visitors to stay at your house…how are you taxed?
Like Uber drivers, many times Air BnB hosts do not realize that they may have become a business owner overnight. It is important to educate yourself on how you will now be treated under the tax code. I was able to save my friend a couple hundred dollars in taxes by making him aware of the 14 day rule. If you currently rent out your place through the shared economy, or are considering doing so for a big upcoming event, please consult with a tax professional to keep yourself educated and compliant. We can help with the tax preparation and tax planning of taxpayers involved in the shared economy.
The Milwaukee and Waukesha County areas are in high demand during events such as Summerfest, State Fair, and various sporting events. It is a good opportunity to put some extra cash in your pocket, but be aware of how it could affect you at tax time. Plan now before it is too late! Hammernik and Associates specializes in helping Milwaukee, Waukesha, Brookfield, New Berlin, Wauwatosa with Air BnB tax preparation and tax planning.
Next week, the final segment of the shared economy industry will focus on the online retail sector.
Until then,
Nicholas Hammernik, EA
The post Air BnB – How is it taxed? appeared first on Talking Tax to Milwaukee.
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