Question: I have a niece in Peru who wants to live and study in the U.S. I have no children and love her very much. If my husband and I pay for her education and expenses here – and let her live with us while studying, can we deduct it?
Answer: Possibly. If she is here under an exchange student program, you may deduct, as a charitable contribution, up to $50 a month. However, if she is no one else’s dpendent, lives with you all year, has gross income of less than $3,800.00, and you provide more than half of her total support than you can take her as your dependent. You will want to be very careful to calculate the total support correctly. If she receives public assistance, it may count toward her “income”.
My personal advice: Take her into your home. You won’t regret the year with her. Sounds like she’s very special. Deduction or no deduction, this chance may not come again.