Wang Solutions

Don’t Expect the IRS to Help Much!

School’s out for summer and students across the country get to sleep in and watch cartoons. However, summer is also the time when foreign exchange students get ready to travel and arrange their fall residence with their foreign hosts. If you’re thinking of being a host, you might want to do some homework, especially on how much tax relief (or how little) you’ll get from the IRS.  

$50! That’s the MAXIMUM amount a taxpayer who hosts a foreign exchange student can deduct from his/her federal income tax as a “charitable contribution in qualifying expenses per month for maintaining the student.” If you buy the kid a pair of sneakers, you’ve already spent more than your deduction. And let’s just say that the IRS doesn’t make it easy to get even this small amount.

No frat boys, sorority girls, or any college students for that matter. To get the tax relief, the student you host must be a full-time 12th grader (or lower) in a U.S. school. And don’t try to pass your teenage son off as an exchange student, although he might seem like a stranger to you.  The person you host can’t be a dependent or a relative. Most restrictively, the student must live in your home “under a written agreement between the taxpayer and a qualified organization as part of the organization’s program to provide the student with educational opportunities.” These are only the key limitations, so be sure to check out the IRS publication for more fine print.

Luckily, lots of expenses count towards the deduction: the cost of books, food, clothing, transportation, entertainment,etc. We all know that teenagers hate books, but they love food, clothing, and especially entertainment, and so you’ll probably hit the $50 mark the first day your exchange student arrives. Just keep reminding yourself that $50 per month is as much as you’re going to get back from the IRS.

And it doesn’t look like that amount is going to be raised anytime soon. Back in 2005 a bill was introduced to increase the deduction to $200 per month, but the bill flopped. So if you’re going to be hosting an exchange student, don’t do it for the money. Do it because it’s agreat learning experience for everyone involved!