When is rental income not taxable? Whether you rented your entire house or just a room in it, your rental income is not taxable if it was rented out for fewer than 15 days (i.e., 14 days or less).
What is the problem with not reporting non-taxable rental income? The problem is If you do not report the 1099-K income, even though it is not taxable, then you may trigger a computer audit. A computer audit means the IRS computers will catch the discrepancy between the information provided to them and what appears on your return, and send you a lovely letter in the mail to pay tax on the difference. The IRS will also take it upon themselves to notify California, who will also send you a letter to pay an additional tax liability.
How do I correctly report non-taxable income from the 1099-K to avoid a computer audit? Reporting the 1099-K income is your solution to avoiding a computer audit. You will want to report the 1099-K income and then "back it out" on Line 21 of Form 1040. You should then attach a statement telling the IRS why this happened if they ever look into it.
What if I don't own the home/apartment, I am just a tenant? The rules for reporting rental income apply to both property owners and to tenants "subletting" their homes. Eviction is a concern as a tenant renting out under AirBnb. You may want to review your rental contract to confirm that subletting will not be in breach of the contract.
Any Specific Questions? Send questions about your AirBnb 1099 to firstname.lastname@example.org .
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