Adding foster child to W4?

butterflygrooves

I can't get ahold of our tax preparer so I thought maybe someone on here might know about this...

We are adopting out of foster care and have had LO in our home for 1 month, DW wants to know if she can add LO to her W4.  The adoption should finalize in Dec/Jan, not sure if that affects the situation at all.

TIA ladies!

Sally J

What do you mean add her to your W4?  Do you mean increase your dependants on your W4?  You can have any number you want on your W4, but when you file your taxes you list the names and SSN of your dependants.  Foster children are considered your dependant if you have them in your home for most of the year.  You still need their SSN or tax ID number to claim them on your taxes.

PrincessShay80

Ditto to PP- you have to have the foster child in your home for at least 6 months to claim them as a dependant on your taxes. So when you file your 2011 taxes you can include that child and take advantage of the child deduction, and if your adoption fits the "special needs" criteia (since its a foster to adopt) then you can take advantage of the adoption tax credit as long as your adoption is final in 2011.

Magoy

Sally J:

You can have any number you want on your W4, but when you file your taxes you list the names and SSN of your dependants. 

This.

You can claim whatever you want on your W4 (and I'm think that can be changed at any time.) All that number determines is how much of your paycheck is withheld for taxes each pay period.  You don't actually "pay" until after you file at the end of the year.  That's when you'll get the credit for having another kiddo.  

jenn5-26-07

PrincessShay80:

Ditto to PP- you have to have the foster child in your home for at least 6 months to claim them as a dependant on your taxes. So when you file your 2011 taxes you can include that child and take advantage of the child deduction, and if your adoption fits the "special needs" criteia (since its a foster to adopt) then you can take advantage of the adoption tax credit as long as your adoption is final in 2011.

 You need to check on this. I have asked several Social workers and all have told me you are NOT allowed to claim a fc as a dependant- they are not dependant on you- you are esentially getting paid to care for them, they are wards/dependants of the county. You can claim some of your expensis if you go over and above your reimburstment- but you must document what you spend.

I would never claim a fc- especially if the bp are still in the picture- the dependant claim is not worth the headache of getting audited if bp decides to claim also- you would surly loose that audit. (and since bp are suppose to pay child support while child is in foster care they are actually providing financial support for said child-if they paid cs.)

I would talk to your sw, or a tax professional that deals with adoption stuff.

If you finalize your adoption in the year of 2011 you can claim your child for the whole year- I don't know how it works if you don't finalize till next year, but she's placed with you in adoptive placement during 2011.

you could change the w4 and put away the extra money just incase. However if you finalize this year and you qulify for the sn tax credit it is a huge chunck of change, wich might mean you get all your withholdings returned, but if you don't... I would maybe talk to adoption sw to try to narrow down if finalization will happen this year.  GL!

PrincessShay80

jenn5-26-07:

PrincessShay80:

Ditto to PP- you have to have the foster child in your home for at least 6 months to claim them as a dependant on your taxes. So when you file your 2011 taxes you can include that child and take advantage of the child deduction, and if your adoption fits the "special needs" criteia (since its a foster to adopt) then you can take advantage of the adoption tax credit as long as your adoption is final in 2011.

 You need to check on this. I have asked several Social workers and all have told me you are NOT allowed to claim a fc as a dependant- they are not dependant on you- you are esentially getting paid to care for them, they are wards/dependants of the county. You can claim some of your expensis if you go over and above your reimburstment- but you must document what you spend.

I would never claim a fc- especially if the bp are still in the picture- the dependant claim is not worth the headache of getting audited if bp decides to claim also- you would surly loose that audit. (and since bp are suppose to pay child support while child is in foster care they are actually providing financial support for said child-if they paid cs.)

I would talk to your sw, or a tax professional that deals with adoption stuff.

If you finalize your adoption in the year of 2011 you can claim your child for the whole year- I don't know how it works if you don't finalize till next year, but she's placed with you in adoptive placement during 2011.

you could change the w4 and put away the extra money just incase. However if you finalize this year and you qulify for the sn tax credit it is a huge chunck of change, wich might mean you get all your withholdings returned, but if you don't... I would maybe talk to adoption sw to try to narrow down if finalization will happen this year.  GL!

We got DD 2/1/10- we claimed her as a dependant for our taxes for 2010- I was given her social security number from my case worker for this specific reason. The birth parents were not in the picture and never were, but I could see how there could be an issue if the birth parents were trying to claim the child and so were the foster parents on their taxes, but that was not the case in our situation.  I was told that if the child is in your home for at least 6 months out of the year you can claim them on your taxes. Now if you choose to do it that's up to you, we did and did not have one issue- our accountant checked on this as well before filing our taxes.

 

Sally J

jenn5-26-07:

PrincessShay80:

Ditto to PP- you have to have the foster child in your home for at least 6 months to claim them as a dependant on your taxes. So when you file your 2011 taxes you can include that child and take advantage of the child deduction, and if your adoption fits the "special needs" criteia (since its a foster to adopt) then you can take advantage of the adoption tax credit as long as your adoption is final in 2011.

 You need to check on this. I have asked several Social workers and all have told me you are NOT allowed to claim a fc as a dependant- they are not dependant on you- you are esentially getting paid to care for them, they are wards/dependants of the county. You can claim some of your expensis if you go over and above your reimburstment- but you must document what you spend.

I would never claim a fc- especially if the bp are still in the picture- the dependant claim is not worth the headache of getting audited if bp decides to claim also- you would surly loose that audit. (and since bp are suppose to pay child support while child is in foster care they are actually providing financial support for said child-if they paid cs.)

I would talk to your sw, or a tax professional that deals with adoption stuff.

If you finalize your adoption in the year of 2011 you can claim your child for the whole year- I don't know how it works if you don't finalize till next year, but she's placed with you in adoptive placement during 2011.

you could change the w4 and put away the extra money just incase. However if you finalize this year and you qulify for the sn tax credit it is a huge chunck of change, wich might mean you get all your withholdings returned, but if you don't... I would maybe talk to adoption sw to try to narrow down if finalization will happen this year.  GL!

By IRS website a foster child is a qualifying child and can be claimed as a dependent.

https://www.irs.gov/newsroom/article/0,,id=133298,00.html

 

jenn5-26-07

taken from that IRS link:

In general, to be a taxpayer?s qualifying child, a person must satisfy four tests:

• Relationship ? the taxpayer?s child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these.
• Residence ? has the same principal residence as the taxpayer for more than half the tax year. Exceptions apply, in certain cases, for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.
• Age ? must be under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year.
• Support ? did not provide more than one-half of his/her own support for the year.

fc technically provide their own support in the form of a reimburstment check sent to you monthly, don't they??? You'd have to spend quite a bit of money on the child for that check not to cover at least 51%of their expensis.

Sally J

jenn5-26-07:

taken from that IRS link:

In general, to be a taxpayer?s qualifying child, a person must satisfy four tests:

• Relationship ? the taxpayer?s child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these.
• Residence ? has the same principal residence as the taxpayer for more than half the tax year. Exceptions apply, in certain cases, for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.
• Age ? must be under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year.
• Support ? did not provide more than one-half of his/her own support for the year.

fc technically provide their own support in the form of a reimburstment check sent to you monthly, don't they??? You'd have to spend quite a bit of money on the child for that check not to cover at least 51%of their expensis.

Don't you claim that money as income?  If so then you would claim them as a dependent.  If not and the child claims their own taxes using that income, then I would agree with you, however children under 18 don't usually file their own taxes.  Essentially you are getting child support from the state.  My understanding is that the money received from the state is tiny compared to actual expenses.  There's no way that it covers the child's portion of the rent, bills, food, clothing, etc in total.   

PrincessShay80

I have no idea if we claimed her foster payments as income, I'm pretty sure we didn't- because that is not taken into consideration on our W2's from our employers But I can tell you that her foster payments didn't even cover her daycare expenses- so in no way shape or form did those payments pay her monthly expenses.

Honeslty we have a pretty darn good accountant and or case worker was great, I'm pretty sure that they would not have advised us to do anything that we were not allowed to do. My case worker actually called me in January and said "I wanted to give you DD"s social security number so you can claim her on your taxes since you had her for more then 6 months of the year" so why would I have been told that you couldn't claim foster kids?

When I told our accountant she double checked and told us that yes we could claim her.

Our case worker even went above and beyond and fought to get DD deemed a "special needs" adoption so we could get the tax credit for 2011, even though we didn't pay anything to adopt her.

 

ctbride08

I'm confident you can claim a foster child thats been living in your home for more than 6 months as a dependent. 

And I assure you that the foster stipend comes no where near 51% of their living expenses.

come*on*baby

You can claim a foster child as a dependent and you do not/cannot claim their stipeneds as income. We've done it 2-3 years, including this year when we had the adoption credit tagged on, and have not been audited.