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I'm running an Airbnb and also has a job with W2 income, how can I maximize my tax return?
AI accountant’s answer:
Maximizing your tax return involves both minimizing your taxable income and taking advantage of credits and deductions. Here are some tips to consider for your Airbnb and W2 income situation: 1. Keep detailed records: For your Airbnb income, maintain thorough records of all income and expenses related to your rental activity. This will make it easier to identify deductions and lower your taxable income from the venture. 2. Deduct rental expenses: You can claim various expenses related to your Airbnb rental, such as mortgage interest, property taxes, maintenance costs, insurance, utilities, and cleaning fees. Make sure to allocate these expenses between personal use and rental use if the property is also your residence. 3. Depreciate your property: If your Airbnb property is not your primary residence, you may be eligible to depreciate the property over its useful life (typically 27.5 years for residential rental property). Depreciation can provide tax benefits by spreading out the cost of the property, reducing your taxable income each year. 4. Report your W2 income: Make sure to report your W2 income accurately on your tax return, and don't forget to account for any withheld taxes, as they could lead to a higher refund or lower tax liability. 5. Take advantage of tax credits and deductions: For your personal income, utilize all applicable deductions and tax credits such as the standard deduction (or itemized deductions if they are greater), retirement account contributions, and education-related expenses. 6. Adjust your withholdings: Consider adjusting your W4 form with your W2 employer to ensure you're withholding the appropriate amount of taxes. This can help you avoid owing taxes or receiving a large refund, instead making your take-home pay more consistent throughout the year. Remember, everyone's tax situation is unique, so be sure to take into account your specific circumstances when implementing these tips.
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Ieva Ivanauskas, EA
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