I received a 1099-misc, employee compensation for hosting a foreign exchange student. Can I complete a schedule c for the expenses?

Forum|Forum|7 years ago
June 5, 2019
7 replies
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What expenses can I deduct for hosting a foreign exchange student?

TurboTax Deluxe Online

Best answer by

No, you should not complete a Schedule C since it was not your intent to make money. In addition, since you received money/reimbursement for hosting the student, you are not entitled to the $50/month charitable contribution that is allowed for hosting some foreign exchange students.

You will need to enter the 1099-MISC by following the instructions in the FAQ below, however it will not be subject to self-employment tax (which it would be if reported on a schedule C) and will be reported as Other Income.

You will want to make sure that you select that "you did not intend to make money" and that it was "not like your normal job" when asked in the interview portion of TurboTax.

https://ttlc.intuit.com/replies/4770594

Carl

Level 11

You should start reading at <a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p526/ar02.html#en_US_2015_publink1000229664">https://www.irs.gov/publications/p526/ar02.html#en_US_2015_publink1000229664</a> to educate yourself on this, so you can make an informed decision.

jenniesteele

Level 2

I'm confused on this one - I've read a lot indicating that it depends on the situation, and even the tax publication lead me clearly to the same place. See, if the student is attending a public government program, then, I agree with the recommended answer that you can not deduct expenses, that it is not a business, etc. However, many people host through third-party programs, for international students who attend private schools. This is a whole other animal, and I'd like to see more research here about that. All I have researched has led me to the same place that it WAS intended to earn money, that it IS a business, there is a contractual service being provided, therefore, in all forms, a business arrangement, and business income and related expenses. Can anyone speak to this?

Carl

Level 11

You do state the tax publication "lead me clearly to the same place.". Understand that this is a public user-to-user support forum. If you believe you have cause to not interpret the IRS pubs as we do, or that a specific publication does not apply to your situation as you have presented it to the readers in this forum, then you may wish to seek the services and advice of a qualified tax attorney or CPA in your local jurisdiction. In this forum, we don't challenge the IRS rules, as that's not it's purpose. We can only interpret them as written, to the best of our abilities.

jenniesteele

Level 2

Read entire string to get to the revised answer of this advisor/contributor, which leads to the solution that if you receive a 1099-MISC for a business contracted activity, with the intent to make money, not sporadically, and are required to report that 1099 on a Sch C, then related expenses are deductible. Hosting for international students attending private school is an entirely different program than that described in the IRS publication (for which no payment was previously given, or it was so minimal that a $50/month charitable contribution somewhat appeased the extra financial burden/cost).

Carl

Level 11

Bottom line is, if you file a SCH C for income/expenses incurred with a qualified foreign exchange program, you can expect to be audited. Generally, that won't occur until 24-36 months after the return is processed. Chances are high that you will lose on that front too. But since I'm not a federal judge with the powers to define and interpret federal tax law and apply that definition and interpretation to your specific claim, I'm in no position to state what the definitive outcome of such an audit would be.
This forum is for the purpose of assisting TurboTax users with the use of the TurboTax program and to assist as best we can with the interpretation and understanding of tax law. If that interpretation is not what the poster wants to hear, then so be it.

jenniesteele

Level 2

Good to know. Happy tax season. Best of luck.

Anonymous

Answer

You will want to make sure that you select that "you did not intend to make money" and that it was "not like your normal job" when asked in the interview portion of TurboTax.

https://ttlc.intuit.com/replies/4770594

sactottuser

Level 2

How do YOU know it wasn't their intent to make money?? I bet it was! It was our intent, for sure, so we've been (legally) writing off our offsetting business expenses to avoid nasty self-employment "taxes" plus regular income taxes.