How to File Your Taxes when Hosting Students
When beginning their homestay journey, many families are unsure of how the monthly stipend they receive for hosting students impacts their taxes. The truth is, the guidelines surrounding a host family’s taxes can sometimes be very specific and complicated, and we are here to help you figure it out. Below are some common questions we have been asked about homestay taxation which we have answered in detail in order to guide you through this perplexing topic.
Will I have to pay taxes on the monthly stipend I receive?
This depends. Let’s say you became a summer host, provided a home to a student for a short-term period of 7 days, and did not host again for the remainder of the calendar year. In this case, you would not have to file for the income earned from that week because you have hosted for a period of less than 15 days. If your hosting period exceeds 15 days in the same calendar year, you will have to file with the IRS and pay taxes based on the income you made.
How do I file?
At the beginning of the homestay process, Ojisu will provide all hosts with a W-9 form to collect all taxpayer information before dispersing monthly stipends. In order to file at the end of the year for a period exceeding 15 days, Ojisu will provide you with a 1099 Tax form. In addition, you will need to determine how to report your hosting income to the IRS when you file.
If you, like most Ojisu hosts, provide meals, transportation, or any other special services to hosting students, you will need to file Schedule C which is a form for self-employment. When you file a Schedule C, there is a 15.3% self-employment tax in addition to other possible income taxes, so we suggest you set aside part of your stipend each month to cover these payments. If you are just renting a room and not providing any services to hosting students, then you will file a Schedule E which will lead you to pay income tax on your profit after deducting all of your expenses.
How do I better manage my deductibles?
Are all of my expenses during the homestay deductible? This also depends. Some qualifying deductible expenses include cost of food, transportation, medical care, etc. for the student. If you do file deductions and expenses, you will use the Schedule C form.
We always encourage all Ojisu hosts to monitor and track their expenses. In fact, we provide information on logging your expenses for the student’s portion of food, clothing, entertainment, utilities, or repairs. We also suggest that, if at all possible, you use two different credit cards or bank accounts, one for your own personal expenses and one for all the homestay-related expenses. By having two separate accounts, it will be much easier to keep precise track of all of your spending throughout your hosting experience. In addition, you are suggested to keep all the receipts and available proof for taxable income reduction.
Of course, we highly encourage you to to consult a tax professional for advice on how to best account for the stipend, as you will be responsible for the accuracy of your tax filing.