Vrbo 1099-K IRS Tax Filings for Hosts

Why read this article?

Many accountants who are unfamiliar with Vrbo often overlook the hidden amounts embedded in the Vrbo 1099-K – and no, this isn’t about the typical expenses everyone already knows. The amounts reported by Vrbo are higher than what hosts actually receive. As a result, many hosts end up paying more in taxes than they truly owe.

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This article explains the Vrbo 1099-K and the amounts Vrbo reports to the IRS for each host. If you own or manage a property on Vrbo, you could face unnecessary tax liability if you’re not careful about how you interpret the numbers on the Vrbo 1099-K.

(If you haven’t already, be sure to check our comprehensive guide to Vrbo Accounting & Bookkeeping)

About the Vrbo 1099-K

Each year, Vrbo issues Form 1099-K to the IRS for every host who receives $600 or more in gross revenue. If you receive a 1099-K from Vrbo, you should report the gross amount listed in Box 1a as gross receipts on your Schedule C (or Schedule E, depending on your filing situation) to avoid triggering an IRS review.

From that reported amount, you then subtract the Vrbo-specific deductions, including Vrbo’s service fees, refunds, and adjustments. After that, you subtract all allowable business expenses (such as cleaning, repairs, supplies, and depreciation) to determine your taxable income from your Vrbo listing’s activity.

Vrbo 1099-K Reports gross earnings, NOT net

Vrbo charges various fees to hosts throughout the year, and it’s up to you to calculate these amounts so they can be deducted. Although these fees are taken out of each payout before the funds reach your bank account, they are not subtracted from the gross income reported on your Vrbo 1099-K. This is common among online payment processors that report via Form 1099-K, where they report total gross income—not net income after fees. Specifically, these include the following…

Vrbo Base Commission and Payment Processing Fees are NOT deducted in the Vrbo 1099-K

For every reservation, Vrbo charges a base commission and payment processing fee to the Host. These fees are substracted from reservation earnings before each payout hits the Host’s bank account and are not deducted from the Vrbo 1099-K reported numbers.

Refunds are NOT deducted in the Vrbo 1099-K

When Hosts on Vrbo pay a refund to a guest, whether due to a resolution adjustment, shortening of a stay or cancellation; Vrbo simply subtracts the refund amount from the Host’s next payout, rather than processing an actual refund from the Host’s bank. However, these refunds are not deducted from the Vrbo 1099-K.

See for yourself

Obtain a copy of your Vrbo 1099-K. The completed form can be downloaded from your Vrbo account. From here, you can see the difference for yourself if you download the transaction history CSV from Vrbo for the year. Or even better, download the transactions from your bank statements and sum up the total amount received from Vrbo for the year. You’ll notice a sizable gap between the total amounts received from the bank and the increased amounts reported in Vrbo’s 1099-K. Furthermore, you’ll notice this gap is not in your favor.

Many Hosts are not aware of this gap. Many of which mistakenly accept the 1099-K from Vrbo on face value without separating and deducting these fees, resulting in many Hosts getting burned every year. Therefore, maintaining a system of accounting is a good investment for catching buried fees like this (among many other advantages). Upon closer observation, you’ll arrive at the same finding and will need to close the gap.

Vrbo 1099-K: Closing the expense gap

You can resolve this issue a few ways. Now that you’re aware of the gap, when you receive a 1099-K from Vrbo, you can compile a spreadsheet and calculate Vrbo service fees and refunds for the year manually using Vrbo’s transaction history. From there, you can declare the fees as direct costs and refunds, and include them as separate deductions for the year (on top of all other deductions). This way assumes you know what you’re doing with your accounting.

The better way? Get an Accountant that specializes in Vrbo businesses. Ryan Gallagher, Owner of Vacation Rental Bookkeeping and a highly respected advisor in the short-term rental industry, says it best…

“A bookkeeper who specializes in your industry can get you set up correctly, will already have ideas to share that will help you earn more money, and will save you from paying huge fees… A great bookkeeper will also use the software which best applies to your business and gives you the right reports.”

Source

The Vrbo 1099-K issue we discuss in this article is just one example of how Hosts get burned financially, and it’s not even the worst. We’ll discuss other issues in other articles.

Lastly, if you’re adamant about hiring an Accountant full time, consider at least hiring one to help you set up your bookkeeping system and get you started. While they get you set up, you can plug in Tallybreeze to integrate your Vrbo listings with your bookkeeping software to separate and keep track of your revenues and fees automatically.

Conclusion

Whether you report Vrbo income on Schedule C or through a business entity, the same issue applies: the amount Vrbo reports on the 1099-K is higher than what you actually receive—and that discrepancy works against you. To avoid overpaying in taxes, you must calculate the total Vrbo service fees and refunds for the year and deduct them from the gross amount reported on the 1099-K. A knowledgeable accountant familiar with the vacation rental industry will already know to make these adjustments, but if you’re filing yourself, it’s essential to ensure these deductions are properly recorded.