Is this US income?

[joanmcq]

Clients are married. M is a Mexican citizen here on an A2 visa, therefore he is not considered a resident, and his salary is not considered sourced in the US and is untaxed. He owns a vacation property in Mexico that was rented out through AirBnB. 

Spouse is is a US citizen.  I file S MFS.  All income and property are held as separate property. 

The AirBnB income was deposited to S's US account under S's SSN. Ugh. My thought is to nominee it over to M. However M doesn't have to file since he has no US connected income. (For 2015, I advised the rent income to go to M's account). 

M will ill have to file a 1040NR if he has US connected income. Is this?  It comes from renting a property that is not in the US, but is sent to a US account since that is where both work and reside. Even if sent to M's account it will still be a US account.

any thoughts?

 

[kcjenkins]

I do not think this is US income, since it is earned in Mexico from the use of Mexican real estate property.  The fact that the money earned is then sent to a US bank should not make it US income.  

[MsTabbyKats]

Did airbnb issue a 1042-S or a 1099-K?  The question is really did he give them a SS number or ITIN number? Airbnb is an American company and they as for a number....and it's American income.

 

 

 

[mircpa]

I am curious why S's SS number was used where in fact this rental property was owned by M and it is located in mexico. I agree with Kcjenkins it is mexico source rental income. May be for TIN matching process you report rental income and expense in S's tax return and M would report rental income.

[MsTabbyKats]

I am curious why S's SS number was used where in fact this rental property was owned by M and it is located in mexico. I agree with Kcjenkins it is mexico source rental income. May be for TIN matching process you report rental income and expense in S's tax return and M would report rental income.

it's used because airbnb asks for it.   Airbnb is an American company....so the income is American.  The owner isn't renting it out directly.  The are using airbnb as an agent....and airbnb takes a fee.

if a number isn't  furnished...the income isn't reported.  If it is furnished...a 1099-K (for social security numbers).. ...or a 1042-S (for itin numbers) is issued.

I do lots of these....mostly for non-Americans ...and I've seen it reported (and not reported) all ways.

The bottom line is airbnb is American. It doesn't matter where the property is.

Just want to add....if the guy put the home on Craigslist...and rented it....it would NOT be American income.

Edited June 25, 2015 by MsTabbyKats

[kcjenkins]

Thanks for that info, Tabby.  I was not familiar with Airbnb, so did not realize their part in the transaction.  Based on that, I agree with you.  

[MsTabbyKats]

It's exactly the same as if you hire someone....you're supposed to report the income (1099-Misc).

If the person has an SS# or ITIN#....you can issue the 1099-Misc......even if they don't live here because YOU are American and you are supposed to.   Somewhere along the line....the IRS will be looking for that income you reported on somebody's tax return.

If the worker doesn't have a number....or refuses to give it.....that's another story.

I'd just do a 1040-NR....end of story.  That way everybody is covered.

 

[joanmcq]

M does have an SSN, a holdover from when he was here as a student. It's a weirdly complex situation.  Maybe it's actually an ITIN. What numbers do ITINs start with?  

There's $6k income, so it's not insignificant, although expenses should decrease that. I'll recommend they find another way of renting it if they don't want the income to be taxed, or force M to have to file. 

[MsTabbyKats]

ITINs start with 9