Submitted by Jaime Johnston, H2H Member & owner of Goddamn Man, premium products for body & beard care. 

On November 10, Host2Host convened its fourth annual conversation with a panel of accounting and tax experts to help us get our taxes in order. Expert panelists included Stephanie Solomon, a licensed tax preparer from Block Advisers, Lorilyn Wilson, CPA and owner of Collective accounting firm, and Kim Boaz, owner of Back To Basics Bookkeeping. All of our experts are H2H members. Alanna Schroeder, also a H2H member and owner of The Distinguished Guest, moderated the discussion by asking panelists frequently asked questions submitted by members. Below are some highlights.

Hire a professional or use Turbo Tax? 

The answer boils down to what the experts can do for you versus what you can do for yourself. Stephanie posed the analogy of building a deck. Would you build your own deck or hire an expert to make sure it is built safely? The benefits of hiring tax professionals are many. For example, they:

• Are experts on annual changes to tax laws and how they apply to a variety of short-term rental host situations, 
  
• Ensure you save money with organized accounting of expenses and appropriate deductions (many of which are overlooked, including depreciation),
  
• Protect you from tax liability and represent you in audits,
  
• Prepare your taxes according to individual details to a degree that programs like Turbo Tax are not able to, and many more!
  

Schedule C or a Schedule E?

Panelists often get asked by short-term rental hosts whether they should use a Schedule C or a Schedule E. In short, use a Schedule C when you are a “sole proprietor” and your rental is set up as a business. As a sole proprietor, you will pay 15% self-employment tax.  If your rental is not a business, income is treated as passive and you can use a Schedule E. To help you prepare your Schedule E, Lorilyn shared a handy tool - Schedule E Template. 

Potential changes to tax laws?

Tax laws change every year. We discussed potential changes with the new Biden administration taking office in January. Lorilyn explained that real estate taxes are historically “favored” in tax law, meaning they are generally low relative to other types of taxes. However, with a new administration, panelists anticipate changes may increase the amount of taxes hosts pay, especially related to depreciation (it’s complicated). On the bright side, they hope the new administration will forgive Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans awarded to small businesses because of the pandemic. 

If you would like to hear the answers to all the tax questions and related discussion, you can view a members-only recording here. Not a H2H member yet? Become one to view the Tax Meet-up, plus all our Meet-up videos. Join Host2Host.