Thursday, August 25, 2016

The IRS launches Sharing Economy Tax Center, but it won’t help you with lodging tax

This week, the IRS unveiled its new Sharing Economy Tax Center to help active participants in the sharing economy navigate the many income tax considerations associated with common income-earning activities such as driving for Uber or renting out a room on Airbnb.  Unsurprisingly, the IRS content focuses on Issues for Individuals Performing Services – like a car shuttle service or short-term property rental.  But consider the source.  Remember, this is the IRS whose chief concern is how you report revenue from these activities and file your individual income tax returns.  They are focused exclusively on your income and collecting the proper taxes on that amount at the federal level.

But lodging tax has nothing to do with the IRS.  If you’re looking for lodging tax help on the new IRS website, you’re likely to be frustrated.  Although the site does provide useful information for vacation rental property owners about depreciation, amortization, as well as what expenses you can deduct (such as mortgage interest, real estate taxes, casualty losses, maintenance, utilities, insurance) – issues which will affect your annual taxable rental income – it does not provide any lodging tax compliance guidance whatsoever.

This is due to lodging tax being levied by the city, county, and at the highest level, state tax authorities – not at the federal level.  So while the IRS site may help you understand how to reflect personal earnings from your property rentals on your individual income tax return, it isn’t going to help with lodging taxes.  Which is where we come in.  Lodging tax is a particularly tricky tax because there are multiple entities involved – usually the city, county, and state.  And it’s typically up to the vacation rental property owners themselves to figure out their lodging tax obligations to each tax authority governing their property’s location.  If that doesn’t sound like much fun to you – hint, it isn’t – we can help.  We’ll take care of everything and automate your lodging taxes for you.  And we won’t ever refer you to an IRS Tax Center site – we promise!

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.