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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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I am going to host a Chinese gh school student months (Jan.

Customer Question

Hello,
I am going to host a Chinese high school student for 5 months (Jan. to May, 2016), and I'll be receiving $800/month from the agency which sets up the exchange (so a total of $4,000). I know that I'll receive a form 1099, and that this is taxable income. My question is: what should I do so that I can deduct some or all of it? Most sites tell me to see my tax preparer, but I don't have one. And I don't really want to spend a large part of this money on that. I presume that I need to save receipts, but which ones? And what other costs can I deduct? How do I do that, and what proof do I need?
Thank you very much for your help!
All the best, Michele
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Hi Michele,

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I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Mercer University's Stetson School of Business and Economics, as well as CFP® and CRPS designations.

I can help here

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First, what you can deduct depends on the type of program/agency this is being done through.

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For example, you can deduct up to $50 a month for each full calendar month the student lives with you as a charitable deduction to the qualified organization.... IF the organization is qualified, the student is not your relative or dependent, and is a full-time student in the twelfth or any lower grade at a school in the United States.

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a qualified organization can be any of these organizations:

• A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Certain organizations that foster national or international amateur sports competition also qualify.

• War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico).

• Domestic fraternal societies, orders, and associations operating under the lodge system. (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.)

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Can you tell me more about the organization?

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Let me know and we can go from there

Expert:  Lane replied 11 months ago.

OK I still don't see you coming into he chat here, so I''ll provide a little more - Expenses that can be deducted include amounts you pay to insure the student’s well being and to further his education, e.g., expenses for books, tuition, food, clothing, transportation, medical and dental care, and recreation.

Expert:  Lane replied 11 months ago.

In connection with this deduction you must keep records of your qualifying expenses. You also have to attach a copy of the agreement with the sponsoring organization to your tax return, as well as a summary of the expenses paid for the student and a statement as to (i) the date she became a member of your household, (ii) the school’s name and location, and (iii) the student’s period of attendance.

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Reference:CCH Master Tax Guide

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