Tax deduction for hosting a foreign student

Your Guide to State, Local, Federal, Estate + International Taxation

foreign student, tax, IRS, deductionOne of the considerations you have to keep in mind if you are thinking of hosting a foreign student is the cost of having another person living in your home. Fortunately, the tax law provides some help to offset that cost. You can deduct as a charitable contribution up to $50 a month for the cost of hosting a student in your home under a written arrangement with a sponsoring organization.

The student must be in the 12th grade or lower, cannot be your relative or dependent and must be attending school on a full-time basis. The student must be a member of your household under a written agreement between you and an organization to implement a program of the organization to provide educational opportunities for students in private homes. The organization must be a charitable organization, war veterans’ organization or domestic fraternal lodge. It cannot be a government agency.

If you qualify, you can deduct your expenses for hosting the student, limited to $50 for each full calendar month of qualification. (A month in which the student qualifies for at least 15 days counts as a full month.) Expenses include amounts you pay to ensure the student’s well-being and to further their education, e.g.:

  • Expenses for books
  • Tuition
  • Food
  • Clothing
  • Transportation
  • Medical and dental care
  • Recreation

You cannot include costs you would incur in any event, such as for insurance, repairs, taxes or mortgage interest on your home. You also cannot include amounts for depreciation, or for the value of lodging or any services you provide the student. And if you receive any payment (partial or full) as compensation or reimbursement for your costs, no deduction is available.

While it is common to refer to a student taken into your home as an “exchange” student, in fact, if the student is foreign and the arrangement is under a mutual exchange program under which a child of yours lives with a family in a foreign country, the deduction isn’t allowed.

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:

  1. The date they became a member of your household
  2. The school’s name and location
  3. The student’s period of attendance

Note that since the student is in the U.S. only temporarily, they aren’t considered a U.S. resident and therefore, you can’t claim them as a dependent on your return.

It certainly doesn’t turn hosting a foreign student into a money-making deal, but $50 a month does help reduce the cost of having another person living in your home and makes it that much more rewarding to be a host family.

Michael Anderson