1099 Misc for taking care of foreign exchange students
"In general, you are allowed to deduct up to $50/month per student (see page 4), but only if you aren't reimbursed. In your case, since you are receiving a stipend, the full $2000 will be treated as taxable income. But the question of ""is it worth it"" really depends on how much you will actually spend (and also what you'll get from the experience). Suppose you actually spend $1000/month to host them, and if your combined tax rate is 35%, you'll pay $700 in additional taxes each month, but you'll still profit $300 each month. If your primary motivation for hosting students is to make a profit, you could consider creating a business out of it. If you do that you will be able to deduct all of your legitimate business expenses which, in the above example, would be $1000/month. Keeping with that example, you would now pay taxes on $1000 instead of $2000, which would be $350, meaning your profit would now be $650/month. (Increasing your profit by $350/month.) You will only need to keep spending records if you plan to go the business route. My advice: assume you won't be going the business route, and then figure out what your break even point is based on your tax rate (Fed+state+FICA). The formula is: Max you can spend per month without losing money = 2000 - (2000 * T) e.g. if T = 35%, the break even point is $1300. Side note: My family hosted 5 students in 5 years and it was always a fantastic experience. But it is also a very big commitment. Teenagers eat a lot, and they drive cars, and go on dates, and play sports, and need help with their homework (especially English papers), and they don't seem to like bed times or curfews. IMHO it's totally worth it, even without the stipend..." According to Intuit, you cannot claim the $50 charitable contribution, so the entire $2000 / month will be taxable instead of $1900. That's only an extra $35 if your combined tax rate is 35%. As TTT mentioned, do this for the experience, not for the money. My wife and I have been hosting international students for 10 years now. https://ttlc.intuit.com/questions/3152069-i-received-a-1099-misc-employee-compensation-for-hosting-a-foreign-exchange-student-can-i-complete-a-schedule-c-for-the-expenses
"My number one piece of advice is to see a tax professional who can guide you through the process, especially if you're new to the process. Second, keep detailed records. That being said, I found two articles, [1] and [2] that give some relevant details that you might find helpful. The articles state that: Many artists end up with a combination of income types: income from   regular wages and income from self-employment. Income from wages   involves a regular paycheck with all appropriate taxes, social   security, and Medicare withheld. Income from self-employment may be in   the form of cash, check, or goods, with no withholding of any   kind. They provide a breakdown for expenses and deductions based on the type of income you receive.  If you get a regular paycheck: If you've got a gig lasting more than   a few weeks, chances are you will get paid regular wages with all   taxes withheld. At the end of the year, your employer will issue you a   form W-2. If this regular paycheck is for entertainment-related work   (and not just for waiting tables to keep the rent paid), you will   deduct related expenses on a Schedule A, under ""Unreimbursed Employee   business expenses,"" or on Form 2106, which will give you a total to   carry to the schedule A. The type of expenses that go here are: If you are considered an independent contractor (I presume this includes the value of goods, based on the first quoted paragraph above): Independent contractors get paid by cash or check with no withholding   of any kind. This means that you are responsible for all of the Social   Security and Medicare normally paid or withheld by your employer; this   is called Self-Employment Tax. In order to take your deductions, you   will need to complete a Schedule C, which breaks down expenses into   even more detail. In addition to the items listed above, you will   probably have items in the following categories: Ideally, you should receive a 1099 MISC from whatever employer(s) paid you as an independent contractor. Keep in mind that some states have a non-resident entertainers' tax, which is  A state tax levied against performers whose legal residence is outside   of the state where the performance is given. The tax requires that a   certain percentage of any gross earnings from the performance be   withheld for the state. Seriously, keep all of your receipts, pay stubs, W2's, 1099 forms, contracts written on the backs of napkins, etc. and go see a tax professional." "Let me ELI5 it for you.  It's *illegal* for foreign governments to contribute to or otherwise attempt to affect our elections.  Why?  This is done to prevent undue foreign influence inside our government.  You don't want foreigners, who don't care about America, to be ""pulling strings.""  This law is really old and is considered a big deal to keep the elections clean.  It's also *illegal* for a US citizen to help a foreign government to influence our election.  So you can't collude to help them do the illegal thing.  So taking a meeting with Russian government officials in a attempt to get opposition research on a candidate is thus *illegal* because it's helping the foreign power affect our election.  Don Jr released emails where he admitted to doing this.  That make sense?  Also think about it on a practical level.  Were the Russian going to give the intel to Don Jr for free?  What deal was going to be struck for this compromising info?  Nobody knows, but you have to assume it's something of value." Form 1099-misc reports PAYMENTS, not earnings.  This does not imply the EARNINGS are not taxable in the year they were earned. I assume that you are a citizen of India, and are what Indian law calls a NRI (NonResident Indian) and thus entitled to operate an NRE (NonResident External) account in India.  You can deposit US dollars into the NRE account, but the money is converted to Indian Rupees (INR) and held as INR.  You can withdraw the money and bring it back to the US as US dollars, but the INR will be converted to US$ at the exchange rate applicable on the date of the transaction.  With the recent decline of the Indian Rupee against the US dollar, many NRE accounts lost a lot of their value. You can deposit any amount of money in your NRE account. Some banks may limit the amount you can send in one business day, but if 250 times that amount seriously limits the amount of money you want to send each year, you should not be asking here; there are enough expensive lawyers, bankers and tax advisors who will gladly guide you to a satisfactory solution. There is no limitation on the total amount that you can have in your NRE account.  The earnings (interest paid) on the sum in your NRE account is not taxable income to you in India but you may still need to file an income tax return in India to get a refund of the tax withheld by the bank (TDS) and sent to the tax authorities. The bank should not withhold tax on the earnings in an NRE account but it did happen to me (in the past).  While the interest paid on your NRE account is not taxable in India, it is taxable income to you on your US tax returns (both Federal and State) and you must declare it on your tax return(s) even though the bank will not issue a 1099-INT form to you. Be aware also about  the reporting requirements for foreign accounts (FBAR, TD F90-22.1 etc). Lots of people ignored this requirement in the past, but are more diligent these days after the IRS got a truckload of information about accounts in foreign banks and went after people charging them big penalties for not filing these forms for ever so many years. There was a huge  ruckus in the Indian communities in the US about how the IRS was unfairly targeting simple folks instead of auditing the rich! But, if the total value of the accounts did not exceed $10K at any time of the year, these forms do not need to be filed. It seems, though, that you will not fall under this exemption since you are planning on having considerably larger sums in your NRE account. So be sure and follow the rules. My understanding is that the only tax implication is that any interest income earned on foreign accounts is still taxable in the US if held by a US citizen. If the total across foreign accounts totals more than $10,000 you'll have to report those accounts to the Treasury via FinCEN Form 114, this doesn't create any additional tax obligations, it's just a regulatory measure to stop people from hiding money overseas and not paying tax on those earnings. If the US account is only in your husband's name, and the Australian account is only in your name, there may not be any reporting requirement to the Treasury. Money transferred between spouses is not subjected to gift-tax. Like-kind of exchanges have a list of requirements. The IRS has not issued formal guidance in the matter. I recommend to be aggressive and claim the exchange, while justifying it with a good analogy to prove good faith (and persuade the IRS official reading it the risk of losing in tax court would be to high). Worst case the IRS will attempt to reject the exchange, at which point you could still pony up to get rid of the problem, interest being the only real risk. For example: Past tax court rulings have stated that collectable gold coins are not like kind to gold bars, and unlike silver coins, but investment grade gold coins are like kind to gold bars. So you could use a justification like this: I hold Bitcoin to be like-kind to Litecoin, because they use the same fundamental technology with just a tweak in the math, as if exchanging different grades of gold bars, which has been approved by tax court ruling #xxxxx. Note that it doesn't matter whether any of this actually makes sense, it just has be reasonable enough for you to believe, and look like it is not worth pursuing to an overworked IRS official glancing at it. I haven't tried this yet, so up to now this is a guess, but it's a good enough guess in my estimation that I will be using it on some rather significant amounts next year. I do something pretty simple when figuring 1099 income.  I keep track of my income and deductible expenses on a spreadsheet.  Then I do total income - total expenses * .25. I keep that amount in a savings account ready to pay taxes.   Given that your estimates for the quarterly payments are low then expected, that amount should be more then enough to fully fund those payments.   If you are correct, and they are low, then really what does it matter?  You will have the money, in the bank, to pay what you actually owe to the IRS. Here's an answer received elsewhere. Yes, it looks like you have a pretty good understanding the concept   and the process. Your wife's income will be so low - why? If she is a full-time student in any of those months, you may   attribute $250 x 2 children worth of income for each of those months. Incidentally, even if you do end up paying taxes on the extra $3000,   you won't be paying the employee's share of Social Security and   Medicare (7.65%) or state disability on those funds. So you still end   up saving some tax money. No doubt, there's no need to remind you to be sure that you submit all   the valid receipts to the administrator in time to get reimbursed.  And a must-have disclaimer:   Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this email, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. ... Any information contained in this email does not fall under the guidelines of IRS Circular 230.