Are you thinking about hosting either an American or a foreign exchange student? Did you know that you may be able to claim a charitable deduction for the additional expenses of having the student live with you? Here’s what you need to know:
In order to qualify:
1. The student must live in your home under a written agreement between you and a qualified organization as part of a program of the organization to provide educational opportunities for the student;
2. The student must not be your relative or dependent; and:
3. The child must be a full-time student in grade 12 or under at a school in the United States.
You can deduct up to $50 a month as a charitable contribution for each full calendar month the student lives with you. Any month when the above conditions are met for 15 or more days counts as a full month. In addition, you may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment and other amounts you actually spend for the well-being of the student.
You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Nor can you deduct general household expenses, such as taxes, insurance and repairs.
In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or onetime item, such as a hospital bill or vacation trip.
You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country.
If you claim amounts paid for a student who lives with you, you must submit the following information with your return:
- A copy of your agreement with the organization sponsoring the student placed in your household;
- A summary of the various items you paid to maintain the student; and
- 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.†