Does qualifying for QBI deduction on rental income mean I'll get hit with self employment taxes?

So just to clarify, if I have 3 rental houses and I do all the management myself (finding tenants, collecting rent, arranging repairs), but I'm not like, running a full service operation with daily cleaning/towels/etc, I should still be in the passive income category? Even though I spend maybe 10 hours a week on it?

You're still in the passive income category. Those activities you described (finding tenants, collecting rent, arranging repairs) are all considered normal landlord duties, even at 10 hours a week. They don't rise to the level that would trigger self-employment tax. Where people cross the line is when they provide services to the occupants rather than just services related to the property itself. For example, if you started offering daily housekeeping, providing meals, or other hotel-like amenities, then the IRS might consider it more like a service business than a rental property.

How does it work? Like do you just upload your tax documents from last year and it tells you what you qualify for? My accountant charges me $200 an hour just to ask these kinds of questions.

I'm kinda skeptical. Does it actually tell you anything you couldn't figure out from reading IRS publications? I've been burned before with "tax tools" that just spit back generic advice.

It's super straightforward - you upload your relevant docs (rental income statements, expenses, property details) and it analyzes everything. It gives you specific guidance based on YOUR situation, not just generic advice. It caught that I was missing deductions for my home office where I manage my properties that my previous accountant missed completely. Going way beyond IRS publications is actually where it shines. It applies the latest tax court rulings and regulations to your specific situation. For my rental properties, it identified that one of them qualified for QBI while another didn't based on subtle differences in how I managed them - something I'd never have caught from just reading publications. Saved me way more than it cost when I filed.

Wait how does this even work? The IRS never answers their phones. Is this like paying to cut in line or something?

Yeah right. Nobody gets through to the IRS. I've literally tried calling dozens of times about my rental property tax questions and always get the "due to high call volume" message. If this actually worked it would be all over the news.

It uses a system that continually redials and navigates the IRS phone tree for you, then alerts you when it gets a human. You're not cutting in line - the service is just handling the frustrating part of constantly calling back and waiting on hold. When they get a live person, they transfer the call to you. I was super skeptical too until I tried it. I've tried calling the IRS myself at least 15 times about my rental property QBI questions with zero success. With Claimyr, I put my number in, went about my day, and got a call when they had an agent on the line. The agent gave me specific guidance about when rental income crosses the line into self-employment territory. Was honestly shocked it worked so well.

What about short term rentals like Airbnb? I have a vacation property I rent out and I'm taking QBI on it, but now I'm worried about the self employment tax thing.

Short-term rentals exist in a gray area that depends entirely on the level of services you provide. If you're just providing the basic rental with minimal services (cleaning between guests, basic amenities), it's still generally treated as rental income without SE tax. If you're providing substantial services like daily cleaning, breakfast, concierge services, guided tours, etc., then it starts looking more like a hotel operation and could trigger SE tax. The more your rental resembles a hotel experience rather than just a place to stay, the more likely you'll face SE tax. This is true even if you're using Airbnb or similar platforms.

Using a property management company actually strengthens your position that it's passive income not subject to self-employment tax. When you hire a management company, you're further removed from the day-to-day operations, which reinforces the passive nature of your investment. The management company might need to pay self-employment tax on their fees (depending on their business structure), but you as the property owner are just collecting passive rental income. This arrangement makes it very clear that you're an investor, not running an active business, so you can still potentially qualify for QBI without worrying about SE tax.