How can I make Schedule E to be non-passive income?

anguyen3010
anguyen3010 Member Posts: 1 Newcomer
in Filing my taxes

I have an airbnb rental. My average rental days is less than 7 days and I actively participated in the business. I read up on airbnb reporting guidance that I should report my rental activities on Schedule E. However, when I use schedule E in FreeTaxUSA, it's default to be passive income. What do I need to do to make it non-passive?

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  • Henry
    Henry FreeTaxUSA Agent Posts: 88
    edited March 2

    Hi anguyen3010! It sounds like your Airbnb keeps you pretty busy. Unfortunately, according to the IRS, rental income is generally considered passive income, even if you materially participate, unless you are a qualified real estate professional.

    You will be asked if you are a real estate professional in the software. You'll see that screen populate near the end of the Income menu after you enter Schedule E information. If you indicate that you are a real estate professional, then any Schedule E losses won't be subject to passive activity loss restrictions.

    You can refer to pg 6 of IRS Publication 925 to see the qualifications to be considered a real estate professional.

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