Do I have to report Airbnb cleaning fees as income?

Yes. All amounts received from guests, including cleaning fees, are gross income under IRC §61(a). Airbnb includes cleaning fees in your 1099-K total. You report the full amount as income, then separately deduct your actual cleaning costs as a business expense.

Is a cleaning fee a pass-through that I don't owe taxes on?

No. The cleaning fee is not a pass-through. It is gross income to you. You then deduct the actual cost you paid for cleaning as a separate business expense. If your cleaning fee exceeds your actual cleaning cost, the difference is taxable profit. If your cleaning cost exceeds the fee, the difference reduces your taxable income.

Are security deposits taxable income for STR hosts?

Security deposits held in trust and returned to guests are not taxable income. They become taxable when you retain them — for example, to cover damage or unpaid amounts. At the point of retention, the deposit becomes income and must be reported.

April 6, 2026 · 7 min read

Do I Report Cleaning Fees as Income on Schedule C?

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Yes — cleaning fees charged to guests are gross income and must be reported on Schedule C under IRC §61(a), which defines gross income as "all income from whatever source derived." Airbnb includes cleaning fee revenue in your 1099-K total, and the IRS expects to see the full amount. However, you separately deduct your actual cleaning costs, which typically offsets most or all of the cleaning fee income.

Why Cleaning Fees Are Gross Income

Some hosts mistakenly treat cleaning fees as a neutral pass-through — guest pays $150, they hand $150 to the cleaner, no net income. That reasoning is incorrect from an IRS perspective. The cleaning fee is revenue you receive for the service of providing a cleaned property. What you pay to fulfill that service is a separate deductible expense.

Under IRC §61(a), all amounts received from guests — nightly rate, cleaning fee, pet fee, resort fee, or any other charge — constitute gross income. Airbnb does not separate cleaning fee revenue from nightly rate revenue on your 1099-K. It's all included in the gross payout total.

Common Mistake

Do not subtract cleaning fees from your gross income before reporting on Schedule C, Line 1. Report the full amount received (including cleaning fees) as gross revenue, then deduct your actual cleaning costs separately on Line 11, 22, or 27a. Netting them before reporting is incorrect and inconsistent with the 1099-K you'll receive.

The Correct Tax Treatment: A Worked Example

Here's how cleaning fees flow through your Schedule C correctly:

Item	Amount	Schedule C Line
Nightly rate revenue (40 nights × $200)	$8,000	Line 1 (Gross receipts)
Cleaning fee revenue (40 bookings × $150)	$6,000	Line 1 (Gross receipts)
Total gross income reported	$14,000	—
Actual cleaning cost paid (40 × $120)	−$4,800	Line 11 (Contract labor)
Other operating expenses	−$3,200	Various lines
Net profit	$6,000	Line 31

The Net Effect

In this example, $6,000 in cleaning fee revenue minus $4,800 in actual cleaning costs produces $1,200 of taxable profit from cleaning. If your cleaning costs exceed your cleaning fees (common when you charge below-market cleaning fees), the difference is actually a net deduction. See our detailed guide on Airbnb cleaning fee deductions and also whether cleaning fees can offset cleaning expenses.

How Your 1099-K Reflects Cleaning Fees

Airbnb issues a Form 1099-K showing the total gross payment volume processed through the platform. This includes every cleaning fee charged to every guest during the year. The platform does not separate nightly revenue from cleaning fee revenue on the 1099-K.

This is important for reconciliation: when you enter gross income on Schedule C, Line 1, it should match (or be explainable relative to) your 1099-K total. If you underreport by netting out cleaning fees, there will be a discrepancy between your return and the 1099-K that can trigger IRS matching notices.

What About Security Deposits?

Security deposits are treated entirely differently from cleaning fees. The key distinction:

Deposits held in trust for return: Not taxable income when received. The guest is expected to get this back, so it's a liability, not revenue.
Deposits retained for damages or non-payment: Taxable income in the year you decide to retain them. At the moment you determine the guest forfeits the deposit, it becomes income reportable on Schedule C.
Partial retention: If you retain $300 of a $500 security deposit, the $300 is income; the $200 returned is not.

Pro Tip

Platform security deposits (like Airbnb's damage waiver or security deposit feature) and host-managed security deposits are treated the same way for tax purposes: held amounts are not income until retained. Document damage decisions in writing — a timestamped record of your decision to retain versus return supports the income reporting year if the IRS asks.

Cleaning Fees Bundled Into the Nightly Rate

Some hosts prefer not to charge a separate cleaning fee, instead building it into the nightly rate. The tax treatment is identical: the full nightly rate is gross income, and actual cleaning costs are deducted. The presence or absence of a line-item cleaning fee on the listing doesn't change the underlying accounting.

Hosts who bundle cleaning into the nightly rate may actually have a simpler reconciliation because there's no separate cleaning fee line to explain on the 1099-K. Either approach is acceptable from a tax perspective.

Accurate Income Reporting Starts With Accurate Tracking

DeductFlow imports your Airbnb payout data and separates nightly rates, cleaning fees, and other charges so your Schedule C gross income is always correct and your cleaning deductions are fully captured.

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Disclaimer

This article is for informational purposes and does not constitute tax, legal, or financial advice. Tax rules vary based on your specific situation, filing status, entity structure, and jurisdiction. Always consult a qualified CPA or tax professional for guidance on your specific tax situation. IRS rules and thresholds are subject to change — verify current requirements at irs.gov before filing.