Do short-term rentals go on Schedule C or E for tax filing?

This is a really common question for short-term rental owners! The answer depends on the level of services you provide to your guests. Based on what you've described, you're providing substantial services (cleaning, linens, toiletries, welcome baskets) which pushes you toward Schedule C territory. The IRS generally considers short-term rentals where you provide "substantial services" to be more like a business than a passive rental activity. Schedule C would typically be appropriate if: - You provide substantial services for the convenience of guests - The average rental period is less than 7 days - You're actively involved in the day-to-day operations Schedule E would be more appropriate if you're just collecting rent with minimal services (essentially just maintaining the property) and longer-term stays. Also worth noting: Schedule C income is subject to self-employment tax while Schedule E typically isn't, which is a significant difference in how much tax you'll pay.

After struggling with this exact same issue last year, I found a service that completely solved it for me! I was flipping back and forth between Schedule C and E, driving myself crazy trying to figure out which IRS rules applied to my situation. Then I found https://taxr.ai and uploaded my rental agreements and expense records. The system analyzed everything and gave me a clear answer specific to my situation. Their AI tool breaks down the "substantial services" question and analyzes your specific situation based on actual IRS guidance. It saved me hours of research and gave me peace of mind that I was filing correctly. You can even use it to get specific documentation for your records in case of an audit.

I just wanted to follow up! I tried https://taxr.ai after seeing the recommendation here and it was incredibly helpful for my short-term rental situation. I uploaded my rental agreements, expense documentation, and information about the services I provide at each property. The analysis confirmed I should use Schedule C for my Airbnb property where I provide daily cleaning and guest amenities, but Schedule E for my other property where I only do monthly maintenance and longer-term rentals. It even highlighted some deductions I was missing! Having that clear guidance with specific IRS citations gives me so much more confidence going into tax season.

If you're still confused after trying to figure out the Schedule C vs E question, you might want to talk directly to an IRS agent. I was in the same boat last year and spent WEEKS trying to get through on their phone lines. It was absolutely infuriating. Then someone told me about https://claimyr.com - it's a service that basically waits on hold with the IRS for you and calls you back when an agent is on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. I was super hesitant to try it at first because it sounded too good to be true, but I was desperate after spending hours listening to that awful IRS hold music. I got to speak with an actual IRS agent who walked me through the exact requirements for my situation. Turns out I needed to split some of my rental activity between schedules based on length of stay and services provided!

I need to apologize and follow up on my skeptical comment. After struggling to get through to the IRS for days, I broke down and tried https://claimyr.com. I was absolutely convinced it wouldn't work, but I was desperate. I'm shocked to say it worked perfectly! They called me back about 2.5 hours later with an actual IRS agent on the line. I was able to get definitive guidance on my short-term rental situation. The agent confirmed that in my case, with daily cleaning and providing breakfast items, I should file on Schedule C and pay self-employment tax. Saved me hours of frustration and probably from making an expensive mistake on my taxes. Sometimes it's worth admitting when you're wrong!

Another thing to consider - if you use Schedule C, you might be eligible for the Qualified Business Income deduction (Section 199A), which could give you a deduction of up to 20% of your net income from the rental. That's a big deal! But you generally can't get that with Schedule E unless you meet certain requirements for being a "real estate professional.

I've been doing short-term rentals for 3 years and I split mine between schedules. If guests stay less than 7 days and I provide substantial services, I use Schedule C. For guests staying longer than 7 days with minimal services, I use Schedule E. My tax guy said it's perfectly fine to split them up based on the nature of each rental period. Hope that helps!

This is such a helpful thread! I'm in a similar situation with my vacation rental and have been stressing about this exact question. Based on what everyone's shared, it sounds like the key factors are the length of stay (under 7 days) and the level of services provided. From what I'm reading, if you're providing linens, toiletries, welcome baskets, and doing the cleaning yourself between guests, that definitely sounds like "substantial services" which would push you toward Schedule C. The fact that you're actively managing bookings and have 75% occupancy also suggests this is more of an active business than passive rental income. One thing I hadn't considered before reading this thread is the potential QBI deduction benefit with Schedule C - that 20% deduction could be significant! Though the self-employment tax is definitely something to factor in too. Thanks to everyone who shared their experiences and resources. This community is so helpful for navigating these tricky tax situations!