One thing to consider with Airbnb specifically - if you're renting for short periods and providing substantial services (like breakfast, cleaning during stays, etc.), the IRS might classify this as a "nonrental activity" instead of a passive rental activity. This could actually work in your favor. If you're providing substantial services beyond just the basic rental, you might qualify under different rules and potentially avoid some passive activity limitations. Your daily maintenance might qualify here. I'd recommend keeping a detailed log of all the services you provide and time spent. This documentation could be crucial if you're ever audited.

Has anyone used TurboTax for reporting Airbnb income? I'm in the same situation and wondering if their software handles these passive activity rules correctly or if I need to go to a CPA this year.

Different states have different rules for state income tax on capital gains from home sales. What state are you in? Some states follow federal rules but others have their own rules for exemptions.

The employment-related partial exclusion should definitely work for your situation! Just a heads up though - make sure to keep detailed records of everything related to your job change and the timeline of events. The IRS can be pretty thorough if they decide to review your return later. One thing I'd recommend is getting something in writing from your new employer that confirms the job required you to relocate, even if it's mostly remote. An email from HR or your manager stating that the position necessitated the move to your new location could be valuable documentation. Also, since you mentioned the job is "mostly remote," make sure your offer letter or employment agreement clearly indicates where your official work location or home office is considered to be. With your numbers ($30K gain vs. $229K prorated exclusion), you're well within the safe zone, but having rock-solid documentation will give you peace of mind if any questions come up down the road.

I'm dealing with a similar situation right now! I'm 25 and on my mom's marketplace plan but file my own taxes. When I got my Letter 12C, I was totally panicked because I thought I'd have to pay back thousands in premium tax credits. But after reading through all these responses and doing some research, I think I understand it better now. Since my allocation percentage is 0% (my mom claims 100% of the premium tax credit), I need to: 1. Put zeros on line 34 in Part II since 0% × any amount = 0 2. Complete Part IV with my mom's name and SSN showing the 0%/100% allocation 3. File the form even though I'm not claiming any credit myself The key thing I learned is that Form 8962 isn't just for people claiming the credit - it's also for documenting WHO is claiming it when multiple people are on the same policy. The IRS needs this to make sure the credit isn't claimed twice. Thanks everyone for all the helpful info! This form is way more confusing than it needs to be.

This thread has been super helpful! I'm in almost the exact same situation - 27, on my parents' marketplace plan, got Letter 12C, and was totally lost on how to handle the allocation. Reading through everyone's explanations, I think I finally understand that Form 8962 is required even when you're not claiming any premium tax credit yourself. The 0% allocation means I put zeros on line 34, but I still need to complete Part IV showing my parents are getting 100% of the allocation. One question though - when it asks for the "Premium Tax Credit" amounts from 1095-A in Part II, do I use the amounts from MY 1095-A or my parents'? I'm listed as a covered individual on their 1095-A, but I also received my own 1095-A form. I'm assuming I use my own 1095-A since that's what the Letter 12C is asking about, but want to make sure I don't mess this up! Also really appreciate everyone sharing their experiences with the various services. Nice to know there are options if I get stuck beyond what I can figure out myself.

Don't forget that your K-1 losses might push you into claiming a Net Operating Loss (NOL) if they're large enough to offset all your other income. The rules for NOLs changed after the TCJA - now you can only carry them forward, not back, and they're limited to 80% of taxable income in future years.

This is exactly the kind of confusion I had when I first started receiving K-1s! The key thing to understand is that partnership taxation operates on a "conduit" theory - the partnership itself doesn't pay taxes, so all income and losses flow through to the partners whether you receive cash distributions or not. Your K-1 losses are legitimate tax deductions, not some kind of accounting trick. The partnership actually incurred these losses through its business operations, and as a partner, you're allocated your proportionate share. This is fundamentally different from stock investments where you only recognize losses when you sell. To address your concern about "paying it back" - if the company becomes profitable in future years, you'll receive K-1s showing income rather than losses, which will increase your taxable income. But you won't have to "repay" the prior year loss deductions. Think of it like any other business - losses in one year offset income in profitable years. Just make sure you're tracking your basis properly, as others have mentioned, since you can only deduct losses up to your investment plus any retained earnings allocated to you over the years.

Is anyone else bothered by the fact that the tax system is so complicated that we can't even figure out what our actual income is? Like there are at least 3 different versions of "income" on one form (total income, AGI, taxable income) and they all mean different things. And then there's MAGI which isn't even on the form! How is a regular person supposed to understand this stuff??

I completely feel your frustration! I went through this exact same confusion last year when I was doing my 2019 taxes. The terminology is absolutely mind-boggling for regular people. Just to clarify for the original poster - your AGI (line 11) is what you'll need for most applications like rentals, loans, etc. The $18,200 difference between your AGI and taxable income sounds about right when you factor in the 2020 standard deduction plus any other deductions you qualified for. What helped me was thinking of it this way: AGI is your "real" income after work-related adjustments, taxable income is what the government actually taxes you on after personal deductions, and MAGI is just AGI with some stuff added back for specific programs. It's still unnecessarily complicated, but at least there's some logic to it. The fact that we need entire Reddit threads to explain basic tax concepts shows how broken this system is. Other countries have much simpler tax systems where the government just tells you what you owe!