I am getting different answers to my questions from TT CPA experts, TT's Search Engine, Private CPA's, Homestay companies, individuals, etc. There are enough people out there hosting international students that there should be a standard way of reporting 1099-Misc income and deducting home expenses, food, transportation, etc. on our taxes, but that doesn't seem to be the case.
Here is what I have gathered:
1. You can only deduct $50/month/student if you are not receiving compensation. Doesn't apply to me.
2. You should be able to report your 1099-misc as "other income" and report that it was NOT with the intention of earning money - thus you would not have to pay personal business tax. (additional 15%)
3. However, if I follow #2 above, TT will not allow me to deduct any expenses for home, food, mileage, etc. as an International Host.
4. If I want to make deductions, I have to report my homestay income on a Schedule C as Self-Employment. The TT CPA recommended I do this. However, I can't figure out how to deduct my expenses for the space in my home that is exclusively the students (bedrooms, bathroom). It's not considered "home office" space, since I don't personally use it - according to TT.
5. According to answers on TT's Search link - I am NOT supposed to report it as Self-Employment, because it was not my intent to make money.
So, I asked for Expert Help.
After waiting 2.5 hours, on hold ,just to speak with a TT CPA, (which I am paying extra for), I was told, first, that I should report it as "hobby income". But, when she realized that this didn't work, she said to report as Self-Emp, take the extra 15% taxes, and then report everything you have spent, including square footage of your house (a percentage of which was used by the students), so that your reported gross income (approx $10K for 3 students) is brought down to a Net of less that $400. That way I won't be paying the extra $15 after all. Ok, sounds good. But - that didn't work either. The problem it - TT does not seem to have a way of reporting the rooms in the house, unless it is a daycare, home office, rental, etc.
So, HOW do I itemize my deductions so that I can get my Gross income down to the actual Net? Can ANYONE give me a straight answer - someone who has ACTUALLY done it successfully? I would be sooooo so appreciative! Thank you for your help.
Check out this site for American Homestay Network:
I am using Schedule C, reporting 1099 as Income, and Depreciating Property such as 100% of furnishings bought for students, remodel expense of rooms. Expensing supplies using sq footage % for utilities, home maintenance, % of household # for food. And mileage for driving students. In addition, food and entertainment purchased for them.