Do non-US Airbnb hosts need an ITIN?

Why Airbnb asks for your tax information

Airbnb says it’s legally required to collect tax information to work out whether your earnings must be reported to the IRS. It asks every host with an active US listing or a US payout method, and some hosts with other US connections. If you don’t respond, it may suspend payouts, block your calendar and withhold tax.

W-8ECI or W-8BEN: the form that sets your withholding

Non-US hosts with US listings give Airbnb one of two forms. The difference is whether you file a US tax return.

Airbnb says a W-8ECI certifies that you treat your US listing payouts as effectively connected with a US trade or business and that you will file a US return. It’s generally valid until the end of the third calendar year after you sign it. If it lapses, Airbnb goes back to withholding 30%.

How the 30% tax works, and the alternative

The IRS taxes a nonresident’s US rental income at 30% of the gross rent, or a lower treaty rate, unless it’s effectively connected with a US business. Gross means before any expenses.

The alternative is the section 871(d) election, which treats all your US real property income as effectively connected. You then deduct rental expenses and pay graduated rates on the net. In the IRS’s own example, a nonresident with $10,000 of rent either has 30% withheld and files nothing, or makes the election, offsets the rent with expenses and is taxed only on what’s left.

• You make the election with a statement attached to Form 1040-NR (or an amended return) that lists all your US real property.
• It stays in effect for later years unless you revoke it. While it does, you must file Form 1040-NR every year and keep a valid W-8ECI with Airbnb.
• File on time. Filing more than 16 months after the due date costs you your deductions unless the IRS grants a waiver. Without US wages, the 1040-NR is due June 15 of the following year.

Rent and expenses go on Schedule E. If you provide substantial services, such as regular cleaning, changing linen or maid service, IRS Publication 527 says to use Schedule C instead. A tax professional can tell you which fits your listing.

Getting an ITIN: the usual order

Most hosts can’t use the W-8ECI at first, because they don’t have a US taxpayer ID yet.

1. 1

   Start with Form W-8BEN

   Airbnb withholds 30% of your US listing payouts and reports it on Form 1042-S by March 15 of the following year.

2. 2

   File Form 1040-NR with Form W-7

   Report the rent on Schedule E, attach the election statement if you want to be taxed on the net, and claim Airbnb’s withholding as a credit. Attach Form W-7 (reason box b) and your identity documents.

3. 3

   Wait for the IRS(7 to 11 weeks)

   Allow 7 weeks, or 9 to 11 weeks if you apply from outside the US or between January 15 and April 30. The number arrives in a CP565 notice.

4. 4

   Give Airbnb a Form W-8ECI

   Withholding stops on later payouts. From then on, you file Form 1040-NR every year.

The IRS doesn’t charge for an ITIN, and how to apply for an ITIN explains doing it yourself. TheITINapp’s service can prepare and submit the W-7 for you, but it doesn’t include the tax return.

If your listings are outside the US

If you’re not a US citizen or resident and your listings are all outside the US, you generally don’t need an ITIN. The IRS sources rent to where the property is, and taxes nonresidents only on US-source income and income connected with a US business.

Airbnb may still ask you for Form W-8BEN to confirm you’re not a US person, especially if you use a US payout method. If US tax was withheld from a non-US listing, Airbnb says to submit a W-8BEN and contact it about a refund. US citizens and residents give Airbnb a Form W-9 wherever their listings are.

What an ITIN doesn’t cover

• State and local taxes. The state where the property is may tax the rent too, and occupancy taxes and rental permits are separate again.
• Selling the property. Sales by foreign owners have their own withholding rules. See ITIN for real estate investors.
• Immigration status. An ITIN is for taxes only and doesn’t let you work in the US. See what an ITIN is and ITIN vs SSN.

The ITIN guides cover the rest of the process, from documents to renewal.