How to count AirBnB as a business in order to use a Solo 401k

[MJseast]

Hi all,
I've been trying to internet search for this answer, but am not having luck. I'm hoping someone here can help.

I currently do not have access to a 401K via my job. In addition I do have an LLC formed that I use for occasional contract work (business management). What are the mechanics of having my actively managed AirBnB income come through my LLC in order for me use some of that income in a newly formed Solo 401k?

I read on one forum that you didn't need to change your AirBnb account, but simply needed to have the AirBnB income directly deposited into your business account. This just seems too simple. Does anyone have experience with this?

Thanks!

[mb196]

I think you need a 1099-MISC to do a solo 401K.

AirBnB provides 1099-K to hosts.  See their link below.   

https://www.airbnb.com/help/article/414/should-i-expect-to-receive-a-tax-form-from-airbnb

I've been looking for 1099-MISC income for the same reason, but you need to find someone to pay you as a consultant in order to receive a 1099-MISC.

[MJseast]

Thanks for the reply @mb196. I can't find any definitive resource that states a 1099-K wouldn't suffice. Can you point me to something?

There was another thread where someone said that short-term rental income that was actively managed could be counted as earned income for this purpose.

In any case, I am planning to talk with a CPA in a few weeks so I'll try to get an answer then. If I do, I'll update this thread.

Thanks!

[MJseast]

In case anyone else is researching this, I heard from a CPA that since I will pay self employment tax on this, I can use this income to open a Solo 401K. I don't need to change anything about the AirBnB account to do this.
If I learn more once I actually try to do this, I can update the thread if anyone else is interested in this topic.

[Rocketman]

Yes - paying the self employment taxes is the key. Then it is a business Schedule C on your tax return and you can have the solo 401k up to the amount of income generated less self employment taxes.