Who "writes off" their foster children on their taxes if they have lived with them for longer than 6 months in one year?
I do not.
It is not because I am some saint.
I have a few reasons:
1. My agency sends out this paper around tax time stapled to the checks we get saying that we can't write off our foster kids unless there are special circimstances....I am pretty sure that is untrue. (it's kinda the reason I am posting this question in the first place)
2. We have never wanted to risk someone else claiming the child as well and our taxes getting rejected because that would be a HUGE hassle.
3. We didn't know what the right answer was so we just never worried about it.
-I had a child in my home for 16 months in a row and never claimed them.
-I currently have a child that has been in my home for 20 months in a row that I will not claim until she is adopted.
-I had a foster son in my home for just under 5 1/2 months out of one year. As I said, we never have claimed any of our kids. This child lived in my house and his adoptive family's house ONLY for all of 2010...and yet someone besides one of us claimed him on their taxes!!! His adoptive family's taxes got rejected because someone else used his social security number first!
So anyway, if you are willing to share, do you claim your foster kids on your taxes AND do you claim the money you receive from your state as well?
Just curious.
47 comments:
We never claimed any of our four foster children until we adopted them. If we had, we would have had to claim the money we got from the state as income and it cancelled itself out so we didn't fool with it. But, every single year that we had them their birth parents claimed them so even if we had wanted to, we couldn't have.
Twice I thought about it, but we had one set of kids for 1 week too short and another 5 days too short. ha ha other kids I didn't care. I had a set of kids from July 1. We did not claim them. However, we adopted them in May of the next year and I did claim them for that. It was also always hard to worry about SS numbers and if the bio parents claimed them. I had some friend who did it and they had to fight for months and months to claim their children instead of the bio mom. Lots of paper work.
Per IRS definition in Publication 17 Chapter 3, a "qualifying child" includes a foster child living/placed in your home for more than half the tax year who did not provide more than half of his/her own support. Foster care payments are considered support provided by the state or your agency. They are NOT considered support provided by the child. They are also NOT considered income to you as a family foster care provider (as opposed to a professional foster care provider).
You are absolutely qualified to claim a foster child as a dependent if they have been in your home 183 days of the calendar year (more than half of his/her life if less than 12 months old on December 31st).
If someone else claims the child and you rightly qualify to claim him/her as a dependent, your refund could be delayed (part or all), but it will be resolved in your favor if you provide proof of the placement days in your home, usually through a letter from the case manager/agency or from your billing/payment statements.
You are able to amend your return up to three years after its due date. So you can amend your 2008 return through April 15, 2012. If you didn't claim your qualifying foster child(ren) in 2008, 2009, or 2010, file an amended return, claim them, and get your refund. This is your right under the tax code.
The IRS taxes us a plenty. When they allow a deduction, take it. There is nothing wrong with that. It doesn't make foster care "all about the money". It simply makes you an informed taxpayer.
If bio mom, legal dad,or even bio dad have claimed Lizzie on their taxes since she was removed from their custody (ie when they no longer met the time requirement), they would have committed tax fraud. Yes, the IRS would initially deny your request to use her as a deduction, but you would be able to submit paperwork showing her placement date, and continuing placement, in your home. Eventually, as long as you met the IRS requirements, you would receive that deduction and get more of a refund and the IRS would go after whoever claimed her illegally. I know you don't want them to get into trouble, but they had NO right to claim her and they would only be getting themselves into trouble by doing so.
Our first foster placement we did claim him on our taxes. We had him for 11 months out of the year before he went back to his parents. His parents were not legal and we knew for certainty that they would not be filing any sort of taxes anyway.
None of our other placements have been longer than the 6 months. For us it would depend on the situation as to whether or not we would claim them. We do not ever claim any of the money we get as income. We get so little in our state as it is it really does get mostly all eaten up by expenses for the kids. Foster care is not something you do to make money in our state.
Our accountant has looked into this for us this year. We know that "grandma" has already claimed one of our babies. We have told our accountant this and she will be reporting her to the IRS. Our case manager was the one who told me about grandma but has encouraged us to file and will give us whatever supporting documentation we will need. Yes, it will be a hassle but we got this baby straight from the NICU at 10 days old and we have had her for 14 months. No one has ever had custody of her except us. No you do not claim your foster payment as income.
I second all that Diane says! We claimed our foster son last year and we will claim both of them this year. Our first foster son's mother also claimed him last year after not having taken care of him for one day that year. It's on her. Our accountant said we have nothing to worry about. We have all proof and documentation that he was with us for the entire year. Take the deduction! :)
We claimed our twins last year with just a little bit of a hold up in our refund thanks to the advice of the lovely ladies at fosterparents.com. As others have said, the "reimbursement" is not income and we are legitimately entitled to claim them on our taxes if there more than half the year. Both years we have used Turbo tax and it has a section about this where they walk you through asking how many months they lived with you. Another strike against your agency....?
I went with what Diane said. I looked it up and must have read that paragraph 25 times before I decided that, yes, I was going to "write off" my foster kids this year.
Pumpkin was with us nearly the entire year. Dude & Dolly were with us over the required 183 days. I also filed as early as I possibly could to try and avoid the delay in getting my return. In fact, I'm hoping to see the check deposited in less than a week.
I can understand why people wouldn't. The potential for hassle is quite high. But, getting a little extra back on my return (oh, who's kidding who - my return is huge this year because of it) is worth it to me.
In my state (NY) we can claim our foster children as long as he/she has lived in our home for over 6 months out of the year. Our agency encourages it. We always have. Also, board payments for children living in your home should never be counted as income, regardless of if you claim a child as a dependent. I suppose this could vary from state to state but double check.
I have claimed them in the past. I have also had bio mom claim Baby C and that year we were able to have our taxes ammended. Bio mom did not have him in her custody AT ALL that year. I only will claim a child who has been with me OVER six months. Right now, we are trying to FIND Sprout's social security number... it seems that no one has it :(
I wholeheartedly agree with Diane and that is exactly what we have done for the last five years that we have had foster kids in our home (at least the ones who have been with us for more than half of a year). I think someone else said it, but Turbo Tax walks you through a set of questions to determine if you qualify and we always did...and so far, we have never had a problem with it (except one year when one of our adoptions was finalized we listed one of our kids with the new name and it hadn't been changed on the SS # yet, so they kicked it back because the name and number didn't match...but we fixed it and all was well).
You should go for it...and if there is ever any danger of wondering if you might "make any money off of a child" (which is NOT likely) just remember in a few short years you're going to be paying for their college....lol.
We've had 6 kids but none stayed over 3 months so we never had that issue. BUT, I would if I could. I also don't count the agency payments as income, because it's not. I am however, deducting mileage as they used to pay us for it then stopped but never adjusted our subsidy. We drove over 200 miles a week without getting paid for it.
OK I am incredibly ignorant apparently, but I had no idea about all this! I didn't even know we could claim our foster kids at all. They were with us the entire calendar year last year. With three kids, this could be HUGE for us! Wow! I think this year I might pay somebody to do our taxes for us, maybe. Wow.
We didn't claim the kids the first year because we didn't know we could. We did the second and third year. 4th year they were adopted. We never had any issues.
As for money we receive from the state, it is not taxable so no we don't claim it either. We get a 10-99 form that states we have $0 claimable.
We didn't claim the kids the first year because we didn't know we could. We did the second and third year. 4th year they were adopted. We never had any issues.
As for money we receive from the state, it is not taxable so no we don't claim it either. We get a 10-99 form that states we have $0 claimable.
Yes, we have claimed them.
Yes, we have had the bios claim them at the same time.
The IRS has always been easy to work with when both have claimed. We have always been determined to the legitimate claim.
Prof Zak
Get an accountant to do your taxes for this year, and review your past 3 year's filings. The $ you pay them is deductable, I believe.
If you don't feel comfortable using the return $ for yourself, set up an account for the child (Certificate of Deposit or something at a bank maybe?)for her to use later.
Of course there is always the option of ignoring us humans and following the prompting of the Holy Spirit about what you should do. ;)
Hmmm. I posted earlier but it didn't show up. Looks like you have your answer though that you can claim them if they've been with you for more than 6 months and you do not claim the foster care reimbursement because it is not income.
I wanted to point out something though. You can also claim expenses related to foster care as charitable donations. I remember seeing someone mentioning the miles they drive. This is true but is where it gets tricky. Your reimbursement is meant to cover those expenses but we all know it doesn't cover them 100%. You are only supposed to claim the expenses that are above and beyond your foster care reimbursement. If you calculate all your miles, all the stuff you buy (clothes, food, etc.), the % of your house dedicated to foster parenting, childcare (babysitters), etc. then you can add that up, subtract your reimbursement payments, and claim the rest as part of your charitable contributions. This is where it gets complicated because you need to have receipts (for anything over $250) or keep good records of purchases (cash less than $250) and do the calculations for mileage and your house square footage and do all the math. It may or may not be worth it to you, depending on your financial situation. It's good to do it at least once though to figure out if it's worth all the work!
This charitable deduction (credit actually) has nothing to do with whether or not you claim them as a dependent though so you can do one or the other. You can even do the charitable deduction thing for kids you didn't have for 6 months - all the kids that stay less than that you can count their expenses. This comes in very handy for the daycare we have to pay for in the beginning of our cases - I pay about $500-$1000 per kid and last year I had 8 kids, only three of whom were dependents. I hope this doesn't complicate things...
We would have -- and knew to try it because we use Turbo Tax as others mentioned -- but our current kiddos were placed with us 5 days too late for them to have been here the required half-year.
We wondered about the per diem and whether that would count as "support." Good to know for future reference!
This would be the first year we could. Our first DD was adopted within the first year in care with us, placed Jan., adopted August. Our littlest was placed January last year so we technically could. We will see what the accountant says.
We didn't with our first few placements because 1) We didn't know anything about it and 2) Most didn't stay long enough to qualify. We did claim our now adopted foster kiddos as we had them well over 6 months last year. Someone else also claimed them, but we sent in our placement papers and that was all that was needed to get our refund. I am quite sure the same someone will claim them again even though they have not had custody of the children for over two years.
I claimed the girls I've had since last April without a second thought for a few reasons. :)
1) Bio mom doesn't believe in working. Since I've had her kids she's worked one day at KFC. Her housing is paid for through housing assistance. She begs churches to keep her utilities in line. She is able bodied, has a Medical Assistant certification (degree?), and yet refuses to actively seek employment.
2) I have provided more than 50% of their support. (to me that's enough of a reason.)
3) I do not want BIO mom to claim them, or since I don't think she's entitled to file taxes since she didn't work, I don't want her to allow others to file them. She actively seeks hand outs, and has passed this trait to her kids; I'm not a fan.
We were told by our agency that if a child was with us for 6 months or more we had a choice to either claim them as a dependent or do the charitable deduction thing that another commenter mentioned. If the child was not with us for at least 6 months then our only option was to use the charitable deduction credit for any expenses over the agency payment rate.
Natalie
OK... I am not an accountant, or a tax prep person, but if your agency is issuing you checks and telling you that they are counted as "income" then don't they also have to issue you a W-2 for when you file your taxes. Unless the laws are REALLY different for foster agencies, if they are sending you "pay" then they have to report that to the IRS and give you W-2s for your filings
Thank you so much for all this helpful information everyone! We are getting ready to do our taxes and I really wasn't sure where to start with all this. Thanks for this post and to all the great comments too!!
We will this year. Baby Man was with us for 9.
also, in our state foster care maintenance payment of $19 a day is not listed as "income". It's a maintenance payment.
We just e-filed and found out someone else claimed our foster child on their taxes already. We have had them with us since 2010. We went ahead and filed without claiming them and will file an amendment, however, can you suggest how we go about reporting this to the IRS? It was one of 3 people that claimed them.
We received a little girl into our care at 6 days old...she was born in September of 2011 so she could not have been with us more than 6 months since she was not even 6 months by 12/31/11....can you claim a foster child that only you had in care...we are waiting for a SS# so we know one was never issued previously....
For a foster child born during the calendar year, you can claim her as your dependent if she lived with you for more than half of their life. So if she was placed with you in Sept. at six days old and stayed the rest of the year, she is your dependent for that year. For next year, she will have to live with you at least 183 days (1/2 year) to qualify.
I claimed my 2 foster children on my taxes last year per the advice of my agency. I was also told that the payments received from the state for placement are not taxable, therefore we did not have to report as income on taxes. My return was denied electronically stating someone already claimed one or both children on their taxes. All I had to do was get a letter from my foster agency to send with my tax returns, as well as writing a letter myself stating why I qualify for claiming children. Because it was a paper file, it took longer to process, but I received my refund within 45 days. Later on in the year I received a letter from the IRS repeating to me that two people claimed the same children, and If my return was correct I could ignore the letter. The two boys were in my care all of 2012 as well, and again someone claimed them on their taxes. So I will have to repeat the process of letters but eventually I will get my return. It is ILLEGAL for birth parents to claim their children as a dependent if they are in the foster system. They are not supporting them in any way. Do not let this deter you from filing for a refund that is owed to you.
What if you're really clise in the half year..like 5 days short. We cared for 2 children 178 days..do u take the chance and file? Not sure who checks if the days are accurate?
If ppl that shouldnt be filing the child as their dependents get away with it UNLESS some1 else catches them then I dont see how it would be wrong to try??? Anyone know?
What if you're really clise in the half year..like 5 days short. We cared for 2 children 178 days..do u take the chance and file? Not sure who checks if the days are accurate?
If ppl that shouldnt be filing the child as their dependents get away with it UNLESS some1 else catches them then I dont see how it would be wrong to try??? Anyone know?
Has anyone ever run into problems with the agency telling you that you can't claim your foster kids? We've had 2 kids for all of 2012 and one for 7 months of 2012. The guy preparing our taxes at H&R Block and his supervisors looked into and feel like we can and I talked to a guy at the IRS who also felt like we can claim them but the lady at our agency told me that we better be able to prove this that and the other and that she'll be following up with the IRS if we choose to claim them? Has anyone dealt with something similiar or have any thoughts on it?
That is nice information. I guess i found more information about this topic. I will review your post again.
Thanks......
foster care payments
Thank you so much for this blog.. We just found out from our accountant that our taxes got rejected bc someone else claimed our foster daughter whom we've had for 16 months(all of 2012) .. Her father said he did and will not chg his...so we will be letting the IRS know.
What if you have had your foster child 5 1/2 months? She had been in 3 or 4 other foster homes this year, none as long as she has been in my home. She did not live with either of her parents any this year. Am I able to claim her sunce she lived with me longer than anyone.
Unless your foster child is less than a year old, she must be in your home 183 days. She cannot be claimed by anyone if her longest placement was 5 1/2 months. The exception is if she was born this calendar year. Then if you had her for over half of her days, she qualifies as your dependent.
Guess what you are all stealing from the Irs. The state pays you to take care of those children and its not chump change! Youre not doing it for charity or for the love of the child but for that check in the mail. The agency also gives you food and clothing vouchers which are tax deductible to the agency. To file these children on your income taxes is just over greedy. To the woman who says the mother doesnt believe in working im sure she is caught up in the scandal of Cps. CPS STEALS KIDS FOR GRANTS FUNDED BY OUR GOVT FROM LOVING FAMILIES USING FEAR OF IMMINENT DANGER TO GET THE TITLE IV FUNDING. You people are aiding in this atrocity and I dare you use your own money instead of the states to care for them and then you can claim them with no issue.
To the person that claims it to be "greedy" to claim is children is beyond ignorant!! I've been caring for my two nieces for two years with the pittance of help from dcfs. The month very often outlasts the money. A LARGE portion of my income goes to these kids. Yes i work a good job, and if you call children being taken away because of substance, verbal and physical abuse robbery....you need your head checked. Divide what they pay us by the 24 hrs/30days and see who's being taken advantage of. Give me a break, damn right I'll be claiming them!!
OK for the ignorant out there you do not know how to calculate. As a foster parent you are caring for someone else's child. You do love them, but until they are adoptable it is someone else's child. If you were to run it as a business and take the maintenance fee provided by the state then deduct the actual cost of providing care for the child, you would have a net loss, yes that would be a net loss. So yes, as foster parents that are providing quality care for the children in our home and treating them as a part of the family, you are spending more money and time than the maintence fee.
Wow! It's hard for me to believe how much misinformation is contained on one page.
1. Foster care payments from the government are not considered income whether you claim a foster child on your tax return or not. Foster care payments from private agencies may be income, but the agency will send you a 1099 form or w-2 form to indicate that it is income. Claiming the deduction makes no difference whatsoever.
2. You can ONLY claim you foster child as a dependent on your tax form if the child is with you for more than half the year, and can ONLY claim the EIC if the child is with you for the ENTIRE year. I've never found an advantage to claiming the child who was with me for less than the entire year, so I don't normally bother. In the case of the entire year, no one else can rightly claim them. When you put "foster child" and "12 months" in the boxes, the IRS will reject the biological parents' tax return, not yours. I too have found out that parents have claimed their children on their tax returns after they've been in foster care for the entire year. But it's only when they complain that their tax return was adjusted/rejected/billed back to them because of my tax return.
3. I've been caring for other people's children for 20 years. My advice--take everything the government will give you. They certainly won't give you the help you need when your teenagers start beating the crap out of you because they suffer from drug effected mental illness and RAD after you adopt them. You're gonna need all the help you can get.
I had a foster child for 149 days, which is less than half the year. Her birth mom had custody for a little bit less than that, and she was in a couple other foster homes other than mine. The foster care agency says that the birth mom and I have had custody for about the same amount of time and that her mom wanted to claim her. The birth mom told me in a text she should have talked with me before filing her return, and that she would amend her taxes so I could claim her. But now she isn't doing that.
The rules are murky on Turbotax. It says if she lived with me for less than 6 mo. to put 6 mo. anyway. It also asks if I have an agreement with the parent. I DID have a written agreement after talking with the birth mom, but she renigged. No official tax form was signed by either of us to give the other permission to file or not file. So do I mark that I had an agreement? Do I mark that someone else can claim her? I don't know what to do and the foster care agency just shrugged me off by saying I should consult a tax person.
Do I have a leg to stand on to claim my foster daughter as my dependent?
Current IRS rules are that you cannot claim a dependent child unless that child was in your home 183 days of the year (need not be consecutive). If a foster child was in NO home for at least 183 days, then NO ONE can legally claim her. The exception to 183 days is if the child was born in the tax year, then the infant must be in your home for over half her life. Don't try to claim her for 149 days; you are setting yourself up for a problem.
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