I have been living by myself in a large multi-bedroom apartment in a 3-apartment house owned by my landlord, who lives downstairs. We have been renting out the apartment I live in from time to time on AirBNB. The income goes into my PayPal account. At the end of the month, I
- pay rent,
- pay a portion of the AirBNB income to my landlord to cover his mortgage on the apartment,
pay him one half of the leftover income.
At the end of the year, how do I pay taxes on the AirBNB income, and how do I avoid paying taxes on ALL of the income I received through AirBNB?
I see a few different options.
A. I am self-employed. I could report the total income from AirBNB as part of being self-employed, and list the amount I paid to my landlord as an expense.
B. I could only report the part of the income that I kept for myself. Or, I could take taxes out of the income before I pay my landlord.
C. instead of reporting the income as self-employment income, I could report it, in full or in part, as some other kind of income(?).
D. I could not report the income at all?
I'm just not clear what my best (legal) option is.
I am in Massachusetts, and we will end up renting the apartment for 30+ nights during the current tax year.