Foster children and tax deductions — The Bump
Adoption

Foster children and tax deductions

I have been thinking about this for weeks now and keep meaning to ask my accountant (who is a close friend) but she has a TON on her plate right now.

I run an at home daycare so I know what I'm allowed to deduct for all that but it got me thinking. While I know we can't claim the children as dependents, can we itemize stuff that we buy for them? How do we decide what is coming from our per diem and what we pay for out of our own pocket? Because we are getting a per diem from the state, are we allowed to write off any of that stuff?

It seems highly unlikely that we couldn't write off "anything" but likely that they would get around something like this. It has not been addressed in any of our classes and I haven't asked my SW knowing she's not an accountant. She may have some answers but not all of them.

 

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Re: Foster children and tax deductions

  • - foster children are dependants if the lived with you for 6 months  1 day or more (in the tax year)

    - foster care payments are not taxable income

    I don't know anything about what you would be able to write off

  • image MyColonyNJ:

    - foster children are dependants if the lived with you for 6 months  1 day or more (in the tax year)

    - foster care payments are not taxable income

    I don't know anything about what you would be able to write off

    Mmmm good to know! Thanks.

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  • I was under the impression that you CAN NOT claim foster children on taxes so I asked my worker. her response was: There are guidelines for claiming foster children on taxes but you need enough documentation to have more expenses than covered.  Only the uncovered expenses are available for tax relief.  Typically PATH parents don?t have this much expense but you can review with your preparer. 

    {PATH is our treatment foster care agency}

  • When Charlotte came home it was complicated because she was coming from a foster home to our home, so we had to read up on the rules about who claims her.  Since neither us or the foster parents were her legal parents, the person with the higher AGI claimed her.  IRS has info on their website.
  • image Sally J:
    has info on their website.

     I wondered if they did. Thanks.

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  • Ok so I just looked at this on the IRS website. http://www.irs.gov/newsroom/article/0,,id=133298,00.html

    "If a child is claimed as a qualifying child by two or more taxpayers in a given year, the child will be the qualifying child of:

    • the parent;
    • if more than one taxpayer is the child?s parent, the one with whom the child lived for the longest time during the year, or, if the time was equal, the parent with the highest AGI;
    • if no taxpayer is the child?s parent, the taxpayer with the highest adjusted gross income (AGI). "

    My understanding of that is if foster parents and bio parents both claim same child, and both get audited the foster parents would be in the wrong...

    But before that one of the tests is: Support ? did not provide more than one-half of his/her own support for the year.  I would ask about your foster care reimburstment- is this considered them providing their own support?

  • We were able to claim 3 of our 5 children last year. We use Turbo Tax and I believe it gave us an option to choose "foster child". You don't claim your monthly stipened as income. If the parents aren't doing anything to support the children and are not in the care of the parents, they can not claim them. We were unable to claim our youngest because BM claimed him even though he was never in her care. 
  • I love this board! Thanks ladies! I appreciate all your help!
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