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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3159
Experience:  I've prepared all types of taxes since 1987.
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What expenses can I track for tax deductions if we are hosting

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What expenses can I track for tax deductions if we are hosting an international student for the school year?
Greetings,

Expenses that you can deduct include the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts spent for the support or well being of the student.

There is a limit of $50 per month of allowed deduction which is claimed as part of charitable deductions when you itemize deductions on Schedule A.

The IRS publication 526 has information at http://www.irs.gov/publications/p526/ar02.html#en_US_2011_publink1000229664

"Reporting expenses for student living with you. If you claim amounts paid for a student who lives with you, as described earlier under Expenses Paid for Student Living With You , you must submit with your return:
  1. A copy of your agreement with the organization sponsoring the student placed in your household,

  2. A summary of the various items you paid to maintain the student, and

  3. A statement that gives:

    1. The date the student became a member of your household,

    2. The dates of his or her full-time attendance at school, and

    3. The name and location of the school."

Please ask if you need clarification or more information.

Thank you.

 









Customer: replied 4 years ago.

Thanks for your quick response. I have started looking at the IRS publications, but I had a few more questions.


 


We are receiving $800 per month for 10 months. I filled out a 1099 form for the organization and I know the amount is taxable, but I am tracking mileage for when we take our student somewhere. For instance, we took her to volleyball practice and picked her up. I am assuming a trip with just the student is deductible, but is a trip with the family to church or to a restaurant deductible if the student is with us?

Hello again,

The basic rule is that you cannot include costs that you would incur in any event. Common examples would be insurance, repairs, taxes, or mortgage interest on your home.
Similarly, a trip shared by the family would not be deductible as there is no additional cost just for the benefit of the student and would have been incurred in any event. The cost of her meal would be for her benefit.

Many expenses will have to be prorated for the portion spent on the student such as food; since it is not practical or expected that you would keep her food separate from the family food. So, for five including here it would be reasonable to deduct one fifth of the food budget.

The previously mentioned charitable deduction would only be possible for the amounts spent over which you were reimbursed.

Please continue to ask if you need clarification or more information.

Thank you.

 



Customer: replied 4 years ago.

Thanks for your quick response. I want to clarify, then. Since we are being compensated $800 per month, then we must report that amount as taxable income. Also, if I understand correctly from "IRS Publication 526":


 


Reimbursed expenses. If you are compensated or reimbursed for any part of the costs of having a student living with you, you cannot deduct any of your costs.


 


...then we could only deduct any expenses that go over the amount we are compensated. That being said, if we were to track transportation, percentage of food and utilities (25% based on our family--4 including our student), then we would only be able to take $50 per month if expenses were over $800 per month.


 


I just want to make sure I am clear on this as we go forward...

Hello again,

That is almost correct.

For utilities it would have to be based on the amount that the period the student was there was more than a comparable period (such as the same month last year). My utilities for example, are mainly to cool my home so it would not be 1/4 of the cost to cool the home, which we would do anyway; but perhaps the bit more of heating water for having another person in the home.

Food, it is reasonable to take on a per person basis as that would not be an expense you would have had without the student.

It is only the additional cost that is for the student that can be deducted from the compensation.

If your expenses just for the student are more than your reimbursement that would be the allowable charitable deduction up to $50 per month.

In most cases there is not more spent on the student than the reimbursement; so there is no charitable deduction allowed.

Hope that clarifies for you.






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