Claiming Foster Children As Dependents

The most authoritative source for information on whether foster parents can claim a foster child is :
IRS publication 501, Exemptions, Standard Deduction and Filing Information.

 

There are three main requirements:
  • The child has been a member of the foster parents' household for more than half a year.
  • The child is a US citizen, US resident alien, US National or a resident of Canada or Mexico.
  • The foster parents paid at least half of the child's total support for the entire year.

 To pass the support test, foster parents need to:

  • determine what it cost to support the child for the year and
  • where the money for the support came from (the foster parent, board rate, etc.)  

The IRS publication 501 includes a user-friendly worksheet on page 18 that can help the foster parent figure out what the child's expenses were and how they were covered.  It also explains what is included in "support."  Pages 10 and 15 include information specific to foster parents.

The Earned Income and Child Tax Credits

Many foster families raising children qualify for federal tax credits and don't even know it. The Earned Income (EIC) and Child Tax Credit (CTC) are federal tax benefits for low and moderate income wage earners. Some people can receive a refund even if they don't owe income tax and many can receive both credits. In 2006 if wage earners raising two or more children in their home for more than half the year earned less than $36,348 they could get an EIC of up to $4,536. Wage earners raising children can get an even lager refund by also claimng the CTC.

For puposes of the EIC and CTC, a foster child must be placed with the wage earner by a authoized placement agency, state agency, or court. The child must live with the wage earner for more than half the tax year and meet the other requirements for qualifying child. Foster payments do not generally count as income when determining eligibility for the EIC or CTC. For more information see:

IRS Publication 596, the Earned Income Tax Credit

IRS Publication 972, the Child Tax Credit

 

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NYS Citizens' Coalition for Children, Inc.
501 4th Street, Brooklyn, New York 11215
607-272-0034
office@nysccc.org
 09/04/2008