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Income Tax Write Offs for Child Foster Care Families

JuliaFuller's picture

By JuliaFuller - Posted on 15 February 2009

Can you write off expenses incurred in raising and caring for a foster child in your home? No, not unless you are running a business and you want to claim the income you receive as well. Of course, we all know that the income is actually just a stipend that doesn’t really cover room and board. HOWEVER, federal income tax laws regarding a qualifying dependent were expanded a few years ago to address foster children. Therefore, if the foster child lived in your home for more than half of the year and you provided a dollar more than half of the child’s support, you can claim the foster child as your dependent on your income taxes.

Not only will you receive the exemption for the child, but also the child credit. See page 11 of IRS publication 501, Exemptions, Standard Deduction, and Filing Information, Tests To Be a Qualifying Child. If you are a single foster parent, having a qualifying foster child to claim as a dependent can also qualify you as Head of Household status instead of single, which lowers your tax as well.

Because this is an issue that does not come up frequently with most tax preparers, you may need to tell your preparer or refer the preparer to the publication section cited. You must also provide the child’s social security number, full name, and date of birth. Be sure to let the child’s birth family know that you will be claiming the foster child as your dependent. If the birth family claims the child, thinking that no one else will anyway, the IRS could delay both returns trying to sort it out.

So how do you figure out if you paid more than half the support of the foster child? Look at the fair market value of renting your home furnished by the month. Add up your grocery expenses for a month, utilities, clothing for the child, school expenses, and extra curricular activity expenses. Divide the total of all these expenses by the number of people who live in your home. Does this number exceed the amount that you are paid each month for the foster child by at least one dollar? If it does, then you provided more than half of the support.

Photo Credit: Julia Fuller IRS form 8839 for 2008 tax year



petephil's picture

I'm a bit confused here with the math. In the above article you say to; add expenses for a month; Divide by the number of people in your home; if this number exceeds the amount you are paid each month for the foster child by at least one dollar, it is considered more than half of the support. Wouldn't the sum of Expenses divided by number of people have to be one dollar more than two times the amount received by the county child support services?

Thank you

JuliaFuller's picture

Pete, are there only 2 people in your family? We currently have 10 people at home. If for simplicity sake, our expenses were $10,000 a month, that would divide into $1000 per person worth of expenses. In Michigan, we receive about 504.68 per child over the age of 13. Because my $1000 of expenses exceeds the 504.68 I am paying more than half of the support of this child. I would have to have expenses of at least 505.68 per person to say that I was providing more than half of the child's support. Hope this helps. Julia

petephil's picture

Julia, I understand now. If I had filled out the Worksheet for Determining Support I think I would have seen my mistake. Total of 4 people in our family. On the conservative side: $750.00 per month for expenses. We receive $446.00 from California. I should qualify the support part of the test. Not sure about the Residency test. We received our Foster Grand Child on 7/24/2009. This would not pass the 6 month test; unless I can count the first 2 months of the year that the foster child, her mother and farther all lived with us. Thank you for your help. Pete