A taxpayer can deduct as a charitable contribution up to $50 in qualifying expenses per month for a foreign or American student living with them, as long as the following conditions are met:
- the student is in the 12th or a lower grade at a U.S. school and attends school full-time,
- the student lives in the taxpayer's home under a written agreement between the taxpayer and a qualified organization (see below) as part of the organization's program to provide the student with educational opportunities, and
- the student cannot be the taxpayer's dependent or relative.
Expenses are not deductible in a mutual exchange program, wherein two families exchange children.
What is a qualified organization?
A qualified organization has received tax-exempt status from the IRS under section 501(a).
- A nonprofit community chest, corporation, trust, fund, or foundation operated solely for religious, charitable, educational, scientific, or literary purposes; or to prevent cruelty to animals or children; or to foster national or international amateur sports competition. This is an organization described under IRC section 501(c)(3).
- A war veterans organization. This is an organization described under IRC section 501(c)(19).
- A domestic fraternal society operating under the lodge system. This is an organization generally described under IRC section 501(c)(8) and (10).
What expenses are deductible?
Deductible expenses include the following:
- medical and dental care
- other amounts spent for the student's well-being
Note that if the taxpayer is reimbursed for any part of the expenses, they are ineligible for the deduction with the exception of reimbursement for an extraordinary or one-time item paid in advance at the request of the student's parents or the sponsoring organization.
What expenses are not deductible?
The following items don't qualify:
- depreciation on the home
- the fair market value of lodging
- general household expenses, such as taxes, insurance, and repairs
What needs to be included with the return?
The following documents need to be included with the return:
- A copy of the written agreement with the organization sponsoring the student.
- A summary of the expenses paid to maintain the student.
- A statement with the following information:
- The date the student became a member of the household.
- The dates of the student's full-time attendance at school.
- The name and location of the school.
If the return is being e-filed, these documents can be scanned and saved in PDF form and attached to the return.
Where is the deduction entered?
To deduct expenses for hosting a student, from the Main Menu of the tax return (Form 1040) select:
- Itemized Deductions (Schedule A)
- Gifts to Charity
- Cash Contributions - Enter the total of the expenses. If there are other cash contributions, consider using the F10 key to create an itemized list in the return's supporting notes.
Where is the PDF documentation attached?
If you are e-filing the tax return, from the Main Menu of the tax return (Form 1040) select:
- Personal Information
- Other Categories
- Attach PDF Document
Note: This article provides guidance on how the expenses for hosting an exchange student are entered in the TaxSlayer Pro program. It is not intended as tax advice.