Like thousands of others, you may have ventured into the sharing economy by renting out a room—or your entire home—to travelers. Services like AirbnbHomeAway, and OneFineStay have helped many people to earn some extra income. Now, it's time to figure out if you owe taxes on that income. 

"We've seen an increase in Airbnb related questions, especially in the last year," says Mike Slack, senior tax research analyst at the Tax Institute at H&R Block. "It's a very intricate tax situation, and the rules can get pretty hairy."

The 15-Day Trigger

We'll try to make it easier. First, the good news: Homeowners can rent out property through Airbnb, as well as other services, for up to 14 days in one calendar year without paying any taxes—regardless of how much income you make.

However, as soon as you rent it out for at least 15 days, you'll have to file with the IRS. Understanding this can be tricky because Airbnb only sends you a 1099-K if your rental income was at least $20,000 or you have had more than 200 reservations in a year. But you'll need to file even if your rental income was lower if you rented your property for at least 15 days. The tax issues here can get more complicated. While Airbnb does not provide individual tax advice, it does provide more detailed information about taxes on its site. 

Use the Right Forms

If you need to file, the next step is to determine how to classify and report your rental income. You'll either use the Schedule C or Schedule E. If you simply rent a room—and skip the extras, such as room service, use Schedule E. In this case, you'll pay income tax on the profit after deducting expenses. However, if you provide meals, transportation services or have a maid clean the room while it's occupied, Slack says you'll need to file Schedule C. That will trigger self-employment taxes, so you should set aside quarterly payments to cover both the 15.3 percent self-employment tax and estimated income taxes. Neglecting those payments can result in IRS penalties.

Track Your Expenses

If you rent your property, you can also deduct the fees you pay to Airbnb or other rental-service companies. That includes expenses such as cleaning fees and purchasing new supplies like sheets and towels.

The issue becomes more complicated for shared expenses, such as electric bills. You'll need to apportion such expenses for the part of the house that’s rented out, says Lee. Deductions for homes rented in their entirety are based on the number of days the home is rented.

The IRS also requires homeowners to depreciate their rental property. Depreciation is based on the purchase price and closing costs of the property but doesn’t include the property's land. Depreciation kicks in when a host starts renting out the property.

Both Slack and Lee emphasize the importance of record keeping, either with a ledger, spreadsheet, or tax software. Even homeowners who rent for fewer than 15 days should keep careful track of their income and expenses in case any questions come up with the IRS.

“Keep track of every penny you spend,” says Lee. “If you have set up a record system, that will make your life simpler.”