I received a 1099-K for my rental property from HomeAway. It looks like they included damage deposits and cleaning fees which will be paid out. How is this handled?

Forum|Forum|6 years ago
June 4, 2019
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TurboTax Premier Online

JulieR

You will not report the refundable deposits as income on your return this year. If any portion of the deposits you receive do not get refunded to your tenants, you will report that portion in the year in which that event occurs.

The 1099-K from HomeAway is just reporting the amount of the credit card transactions they processed. You need to deduct the deposits you received from the total "income" they are reporting and enter the net amount as "rents received". Be sure to retain all your rental records that support the reductions you make.

DiddlyD

So you even enter the income reported on the1099-K in Turbo tax or just enter your actual rent income as you normally did and just ignore the 1099 entry all together, because it will include those non income refundable deposits. I even make Cleaning Deposits "Refundable" which has been very successful (renters are more careful during their stay to reduce their work in the end) and saves me a lot of time getting things ready for the next renter.

DiddlyD

BTW, I use a Rental payment app not Homeaway to process my rental transactions. They use Chase Bank to facilitate the money transfers and I am told they will report every dollar that went through their system over 600.00 on 1099-K. This is a real problem for small time landlords trying to automate rental transactions.

Carl11_2

Employee

In a nutshell;

All income received for rental property for any reason from any source is reported as rental income. Period. What you enter on the tax return has to match or exceed the total of all tax reporting documents received for that income. If the tax reporting document you received included the tenant's refundable deposit, then you can go ahead and report it as rental income. Then you can report the deposit as an expense in the expenses section, in the miscellaneous expense section. Just label it something like "Tenants deposit placed in escrow". That way, you don't get taxed on that deposit.

If at the end of the lease or when the tenant vacates, if you refund the deposit you have nothing to report. Howver, if you lay claim to all or any part of that deposit, then it must be included in the rental income.

DiddlyD

Additionally, putting deposits into a separate account is not correcting the problem please don't muddle the issue with that. You apparently are not a real tax advisor.

Critter-3

STOP trying to enter the 1099-K in the 1099-K section of the program ... your hitting your head against a wall for no reason.

The income reported on a 1099-K is simply entered as rental income in the Sch E entry section of the TT program ... look at the input screen and read the FAQ :

ALSO NOTE ... "last month" & security deposits are not income in the year received and should not be entered as such UNTIL it is forfeited. If that is reported on the 1099-K then to keep the IRS happy you can enter the income as reported on the 1099-K form then make a negating entry in the expenses section such as "less security deposit". And technically those payments from the tenent should not be kept in your checking account but in a separate non interest bearing account meant to house these "escrow" payments and in some states this is a requirement by law ... check your state's rules.