1099-K, Schedule E and the seven-day rule

Taxes · US Published July 2, 2026 3 min read

Direct bookings change one thing about your taxes: the money now arrives from your own payment processor instead of from a platform. The income was always yours and always reportable. What changes is which forms appear and who does the arithmetic.

The 1099-K, and why it is less dramatic than it sounds

The threshold moved twice and then moved back. The One Big Beautiful Bill Act, passed in July 2025, permanently restored the old federal rule: a payment processor issues a Form 1099-K when you exceed $20,000 in payments and 200 transactions in a year. The $600 threshold that was scheduled to arrive is gone.

Two footnotes that matter more than the headline:

Some states set a lower bar. Maryland, Massachusetts, Vermont and Virginia require a 1099-K at $600 with no transaction minimum for in-state activity.
No form does not mean no tax. Every dollar of rental income is reportable whether or not a 1099-K arrives. The form is a copy of information sent to the IRS; it is not what creates the obligation.

When you take direct payments, Stripe is the processor, so it is Stripe that issues the form. Your bookings on Airbnb and your bookings on your own site will show up on separate documents, which is a bookkeeping detail, not a problem.

Schedule E or Schedule C

Most short-term rentals belong on Schedule E, as rental income. Schedule C — and with it self-employment tax — comes into play when you provide substantial services of the kind a hotel or B&B provides: meals, daily housekeeping during the stay, concierge service, transport.

The ordinary things a vacation rental does — utilities, linens, trash, cleaning between guests, a welcome basket — are generally not substantial services. The distinction is worth real money, because Schedule C income carries roughly 15.3 % self-employment tax that Schedule E income does not.

The 14-day rule

Under section 280A(g), if you rent a home for 14 days or fewer in the year and use it personally for at least 15 days, the rental income is excluded from federal income tax entirely. You also deduct nothing against it. This is the rule behind renting a house out for one big local event and reporting nothing — and it is all-or-nothing: day fifteen brings the whole year into the normal rules.

The seven-day rule, which is the one people miss

If the average period of guest occupancy is seven days or less, the activity is not a “rental activity” for the passive-loss rules at all. Combine that with material participation — the usual tests being more than 500 hours in the activity, or more than 100 hours and more than anyone else — and losses can be non-passive, which means they can offset other income.

This is a genuinely valuable position and also the one most often claimed without the records to support it. If you plan to rely on it, keep a contemporaneous log of hours. “I was there a lot” is not a document.

What your records need to contain

Whoever prepares your return will ask for, per booking: dates, nights, the rent, the cleaning fee, the tax collected, the processing fee, and the payout that actually landed. Both channels, reconciled. If that takes you a weekend of scrolling through emails, you will do it badly.

What this means for your website

Every direct booking is stored with its dates, amounts, tax and guest details, and exports to a spreadsheet whenever you want it — which is the file your accountant asks for. Stripe holds the payment record on its side, in your own account, under your own tax ID. Nothing about the money passes through us, so there is nothing on our side for you to reconcile.

Whether you land on Schedule E or C, and whether the seven-day rule is worth chasing, is a conversation with a CPA. We can only make sure the numbers you hand over are right.

Orientation, not tax advice, and deliberately federal-only — your state has its own rules. Talk to a CPA who has seen a short-term rental before; the difference between the two schedules is worth more than their fee.