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: 104
    edited March 2024

    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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