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Airbnb sends 1099 to property manager

Forum|Forum|4 years ago
October 20, 2021
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When Airbnb issues a 1099 to property managers, how does the Airbnb Property Manager record the money collected for their customer, the Property Owner? It's NOT income for the property manager. It's just a bunch of deposits. The property manager shouldn't receive the 1099. How does the property manager fix that on their tax return? Not showing the money is cause for an audit by the IRS, showing it is totally incorrect and cause for increased liability, implying a business with ridiculously more income than it really has.

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Best answer by Anonymous_

Airbnb allows listing a property as the 'property manager' - so it's not really listed "in the property manager's name", but rather FOR the owner. I asked this same question on Quora and received a response that makes more sense (link below), however, it doesn't solve the problem of actually receiving a 1099 and how to properly handle it. Recording the income does not appear to be correct and would show a business with significantly more income than it really has, which I am not sure is even legal and is likely to result in additional liability incl. much larger cost for insurance. Recording 10x the gross income one really has just doesn't seem right on any level. It's also going to look weird to the IRS to have such high revenues with proportionally extremely low net income.

https://www.quora.com/How-do-I-file-taxes-as-a-Airbnb-property-manager/answer/Mike-Emeigh?comment_id=[removed]&comment_type=2

@Aquitaine wrote:

Airbnb allows listing a property as the 'property manager' - so it's not really listed "in the property manager's name", but rather FOR the owner....

Yes, it appears as if might want to raise this issue with AirBnB since you are a property manager. If that is unsuccessful (which I would suspect it will be), then you are left with a decision as to whether or not to report the proceeds from the 1099 as income (and deduct the outflow as an expense) or simply explain the mismatch if you are contacted by the IRS.

M-MTax

So the property manager shows the income and then the funds forwarded to the owners are subtracted as expenses. The result is the manager retains the fee or commission.

A

AquitaineAuthor

But it is NOT income for the property manager. That's my entire issue with it.

Carl11_2

Employee

Yes, it is income for the property manager. Every penny of it. Then what the property manager pays to the property owner is a deductible expense for the property manager. The property manager would need to issue the property owner a 1099-MISC with the amount the property owner was paid reported in box 1 of that form.

Michalanne

I am a property manager but I do allow all of the payments from Airbnb to go directly to the owners. I then bill them accordingly each month for the percentage agreed upon as well as all of the cleaning fees. From my limited understanding, Airbnb should then be the one issuing the 1099 to the property owners. They would then deduct my charges as an expense. I would then record only the income that I received. I would then not need to issue them a separate 1099. Does this sound correct?

J

janna7

That is a work around for sure; however that would take me way more time. With our software, we collect all income and pay all the expenses, take out our fee then send remainder to the Owner. AIR BNB will 1099 us and we 1099 the owners.

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AquitaineAuthor

It makes sense to collect the money, take out all the expenses and send the remainder, especially because you don't have to worry about the owners not paying their bills. And it certainly appears customary to do it that way. I've run the issue - having to record income that isn't mine - by a TurboTax Expert, plus a TurboTax CPA. They both understand the dilemma but unfortunately had no solution. Apparently, Airbnb as of 2022 will issue 1099s for all funds disbursed, so you are forced to record a potentially immense amount of "income", that, if properly accounted for, wouldn't even show up on an income statement. It's a balance sheet item - the money collected is just a deposit. Only the fees are the property manager's income. Yes, it matters... I would very much appreciate feedback from some users, who also understand why this is a problem.