Is my Airbnb rental income Schedule C or Schedule E? My accountant switched forms

This is actually a common confusion with Airbnb income. The difference between Schedule C and Schedule E comes down to whether you're providing "substantial services" along with the rental. Schedule C is for self-employment/business income, where you're actively providing services to guests (regular cleaning during their stay, breakfast, rides, tour guidance, etc). Schedule E is for rental income where you're primarily just providing the space with minimal services (basic cleaning between guests, etc). The IRS has been cracking down on this distinction lately. Your accountant may have changed forms because they determined your activity is more accurately classified as a rental property (Schedule E) rather than a service business (Schedule C). Or perhaps you mentioned doing fewer services for guests during 2023. The fee difference makes sense - Schedule E is more complex to prepare because it involves depreciation calculations and other rental property considerations that Schedule C might not.

Just wanted to share my experience - I had the exact same issue with my Airbnb taxes and found https://taxr.ai super helpful! My accountant switched from Schedule C to E without explaining why, and I was completely lost. The service analyzed my tax documents and explained that the switch was actually correct in my case. Apparently, I wasn't providing enough "substantial services" to qualify as a business (Schedule C), and the IRS has been focusing on this distinction lately. They showed me exactly what makes my Airbnb a rental property (Schedule E) vs. a service business. They also pointed out some deductions my accountant missed that actually saved me about $1,200 once I had them corrected!

Just wanted to follow up - I actually tried taxr.ai after responding here. I was totally skeptical at first but I'm really glad I gave it a shot. The analysis showed that my mountain cabin rental should definitely be on Schedule E, not Schedule C (which is what my accountant had been using for 3 years!). They explained that since I only provide basic cleaning between guests and don't offer daily housekeeping, meals, or other "substantial services," my property counts as a rental property for tax purposes. The report even showed me exactly which tax court cases established the difference and how the IRS is enforcing it. Definitely recommend for anyone dealing with Airbnb tax confusion!

For anyone struggling to get answers from their accountant on this Schedule C vs E question (like I was), I finally got through to an actual IRS agent who explained everything. I used https://claimyr.com to skip the 2+ hour hold time and it was honestly amazing. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that without "substantial services" (daily cleaning, meals, concierge, etc.), Airbnb income should typically go on Schedule E as rental income, not Schedule C. They said they've been auditing people who incorrectly file Schedule C because it affects self-employment tax. Getting this straight from the IRS gave me peace of mind to confront my accountant about the mistake they'd been making.

I have to admit I was the biggest skeptic about Claimyr, but after seeing it mentioned here, I decided to try it. I'd been trying to get through to the IRS for WEEKS about my Airbnb Schedule C/E confusion. Claimyr actually got me connected to an IRS agent in about 40 minutes (while I went about my day), and the agent confirmed what others here said - since I only do cleaning between guests and provide basic amenities, my Airbnb income belongs on Schedule E, not Schedule C. The agent also explained that the reason tax preparers charge more for Schedule E is because of the additional depreciation calculations and passive activity loss rules. So my accountant switching forms and charging more was actually correct, they just did a terrible job explaining it!

Just to add some more context - I'm both an Airbnb host and a tax preparer. The Schedule C vs E question is one of the most common issues I see with my clients. Generally speaking: - Schedule C = active business providing substantial services (breakfast, tours, daily cleaning, etc) - Schedule E = passive rental income with minimal services (just providing the space and basic amenities) The fee difference is absolutely justified. Schedule E requires more work because we have to calculate depreciation, allocate expenses correctly, and apply passive activity loss limitations. That said, $895 sounds very high unless you have a complicated setup with multiple properties.

Has anyone used TurboTax for their Airbnb? I'm trying to figure out if I should just do it myself instead of paying these crazy accountant fees. My situation is pretty simple - just one apartment that I rent out on weekends, and I only provide basic cleaning between guests.

I've been dealing with a similar situation and wanted to share what I learned after doing a deep dive into this. The IRS Publication 527 (Residential Rental Property) actually has specific guidance on this exact issue. The key test is whether you provide "substantial services" to your guests. Things like daily maid service, regular meal service, or concierge-type services would put you on Schedule C. But if you're just providing the typical Airbnb setup (cleaning between guests, basic amenities, maybe some snacks), that's Schedule E territory. One thing that really helped me understand this was looking at the self-employment tax angle. Schedule C income gets hit with the 15.3% SE tax, while Schedule E doesn't. So if your accountant correctly moved you from C to E, you're actually saving money on taxes even though the prep fee went up. The fee increase does sting though - maybe ask your accountant for a breakdown of what additional work Schedule E requires so you understand where that extra cost is coming from?