What expenses can I claim for my Foreign Exchange Student?

If you host a foreign exchange student in your home, you may be able to claim a charitable contribution deduction for certain expenses you pay on the student's behalf.

Under IRS rules, qualifying host families can generally deduct up to $50 per month for each month the student lives in their home, provided all eligibility requirements are met.

This deduction is claimed as an itemized charitable contribution on Schedule A (Form 1040).

Who Qualifies for the Deduction?

To qualify, all of the following conditions must be met. The student must:

1. Be enrolled full-time in 12th grade or below at a U.S. school.
2. Live in your home under a written agreement with a qualified sponsoring organization.
3. Participate in a program designed to provide educational opportunities.
4. Not be your dependent.
5. Not be related to you.

If any of these requirements are not met, the deduction is generally not allowed.

What Is a Qualified Organization?

The exchange student placement must be arranged through a qualifying organization, such as:

• A nonprofit charitable, educational, religious, or scientific organization
• A qualified veterans' organization
• A domestic fraternal organization that meets IRS requirements

The organization must sponsor the student placement program under IRS guidelines.

What Expenses Can I Deduct?

The allowable deduction may include amounts you spend for the student's care and well-being while they live in your home.

Examples include:

• Books and school supplies
• Tuition expenses you pay for the student
• Food and meals
• Clothing
• Transportation costs
• Medical and dental care
• Entertainment and recreational activities
• Other reasonable expenses related to the student's support and welfare

The total deduction is generally limited to $50 per month per student, regardless of the amount you actually spend.

What Expenses Can't Be Deducted?

Certain costs don't qualify for the deduction, including:

• Depreciation on your home
• The fair rental value of lodging provided to the student
• General household expenses, such as:
  • Property taxes
  • Homeowners insurance
  • Utilities
  • Home repairs and maintenance

These costs are considered personal living expenses and aren't deductible as charitable contributions.

When Am I Not Eligible for the Deduction?

You generally can't claim the deduction if:

• You receive reimbursement for the student's living expenses.
• You participate in a reciprocal exchange program where your child lives with a family in another country in exchange for hosting a student.
• The student is your dependent or a relative.
• The placement isn't sponsored by a qualified organization.

How Do I Report the Deduction in the Software?

To enter the deduction, follow these steps:

1. Go to Federal.
2. Select Deductions.
3. Choose Select my forms.
4. Open Itemized Deductions.
5. Select Donations to Charity.
6. Choose Noncash Donations.

Then:

• Select Yes if the total value of your noncash donations (excluding mileage) exceeds $500, or
• Select No if your total is $500 or less.

Complete the charity information section and enter the qualifying amount.

Important Filing Requirement

If you're claiming expenses for a foreign exchange student, you'll generally need to print and mail your tax return rather than e-file it.

Include the following documentation with your return:

1. A copy of the written agreement with the sponsoring organization.
2. A summary of the expenses you paid for the student.
3. A statement that includes:
   • The date the student became a member of your household
   • The dates of the student's full-time school attendance
   • The name and location of the school attended

Keeping copies of all supporting documents for your records is also a good idea.

Do I Have to Itemize to Benefit From This Deduction?

Yes.

This deduction is reported as a charitable contribution on Schedule A and only provides a federal tax benefit if you itemize deductions. If your standard deduction is larger than your total itemized deductions, the standard deduction will generally provide the greater tax benefit.

The software automatically compares both methods and uses the one that results in the lowest tax liability.