Hi, me and my husband are hosting a high school exchange student attending a private school in our city. We received a 1099-MISC reporting the amount we received last year. It's in box 1 (Rents).
I added it to TurboTax as a self-employment income and it charged me a huge amount of taxes for that. I used the deductions page and was able to lower that amount, but it still was a lot of money for taxes compared to how much money we received and how much money we have to spend in order to take care of the student.
Should I enter the gross amount on Turbo Tax or the amount we actually made as a profit? How do I deal with all food, transportation, housing expenses?
Has anyone been in the same situation in the past? What did you do?
You are correct to deduct expenses from the income you received. Here is a link with discussion on that topic. If you have more expenses the IRS allows you to deduct a maximum of $50/month for hosting a foreign exchange student. It is entered as a charitable donation. See this link for more information.
Thank you for your reply.
So when I enter my 1099-MISC, should I report the income after expenses?
We did make a profit so the charitable deduction won’t be something we’ll be doing, but I want to make sure we only get taxed on the actual amount we profited.