If you’re a foster parent, you may be able to claim your foster child as a dependent on your federal taxes. To qualify, the child must have lived with you for more than half the year, and you must have provided more than half of their support. You can also claim the child if they’re under 19 years old, or if they’re a full-time student under 24 years old. The child doesn’t have to be related to you, and you don’t have to have adopted them. If you meet these requirements, you can claim the child as a dependent and receive a tax credit or deduction. The amount of the credit or deduction depends on your income and the number of dependents you claim.
Foster Child Expenses and Tax Deductions
When you care for a foster child, you incur expenses that are not covered by the foster care stipend. These expenses can add up quickly, so it’s important to understand what you can and cannot deduct from your taxes.
Eligible Foster Child Expenses
The following foster child expenses are eligible for a tax deduction:
- Clothing
- Food
- Education
- Medical care
- Transportation
- Recreation
- Other expenses that are necessary for the child’s care and welfare
You cannot deduct expenses that are reimbursed by the foster care agency, such as the monthly stipend you receive for the child’s care.
Tax Deductions for Foster Child Expenses
The following tax deductions are available for foster child expenses:
- Itemized Deductions: You can deduct foster child expenses that exceed 7.5% of your Adjusted Gross Income (AGI). If your itemized deductions are less than the standard deduction, you will not be able to take this deduction.
- Adoption Tax Credit: If you adopt a child from foster care, you may be eligible for the Adoption Tax Credit. This credit is available for up to $14,890 per child and can be claimed for the first year after the adoption is finalized.
- Foster Care Education Expenses Deduction: You can deduct up to $2,500 per year for qualified foster care education expenses. This deduction is available for expenses that are incurred to obtain or maintain a foster care license or certification, or to attend foster care classes or training.
To claim these deductions, you will need to complete the following forms:
| Deduction | Form |
|---|---|
| Itemized Deductions | Schedule A (Form 1040) |
| Adoption Tax Credit | Form 8839 |
| Foster Care Education Expenses Deduction | Form 8863 |
If you have any questions about claiming foster child expenses on your taxes, please consult with a tax professional.
Dependent Status of Foster Children
Foster children can be claimed as dependents on federal taxes under certain conditions. To qualify, the child must meet the following requirements:
- Under age 19, or under age 24 if a full-time student
- Living with the taxpayer for more than half the year
- Not providing more than half of their own support
- Not filing a joint tax return with their spouse
In addition, the taxpayer must meet the following requirements:
- Provide a permanent home for the child
- Maintain financial responsibility for the child
- Have custody of the child for the entire year
If the child meets all of the above requirements, the taxpayer can claim them as a dependent and receive a child tax credit. The child tax credit is a tax break that reduces the amount of taxes owed.
Table of Dependent Status Requirements
| Requirement | Taxpayer | Child |
|---|---|---|
| Age | N/A | Under 19 (or under 24 if a full-time student) |
| Living arrangement | Provide a permanent home | Living with the taxpayer for more than half the year |
| Financial support | Maintain financial responsibility | Not providing more than half of their own support |
| Custody | Have custody of the child for the entire year | N/A |
| Joint tax return | N/A | Not filing a joint tax return with their spouse |
Tax Credits for Foster Care Expenses
Foster care providers may be eligible for tax credits to help offset the costs of caring for a foster child. These credits include:
- Adoption Tax Credit: Provides a credit of up to $14,890 per eligible child adopted or placed in foster care with the intent to adopt.
- Child Tax Credit: A credit of up to $2,000 per eligible child, including foster children meeting certain income limits.
- Dependent Care Credit: A credit for expenses paid for the care of a qualifying dependent, including foster children, allowing working parents to offset child care costs.
To claim these tax credits, foster care providers must meet specific eligibility requirements and provide documentation to support their expenses. Detailed information on eligibility and claiming these credits can be found on the IRS website.
Reporting Foster Child Income on Tax Returns
Yes, you usually can claim a foster child as a dependent on your federal income tax return if you provide a home for the child and meet certain other requirements. However, you cannot claim the child if the child’s parents or other relatives provide more than half of the child’s support during the year.
If you can claim the foster child as a dependent, you may be eligible to claim the following tax benefits:
- The child tax credit
- The earned income credit
- The dependent care credit
- The head of household filing status
To claim the child as a dependent, you must meet the following requirements:
- The child must live with you for more than half the year.
- The child must be under age 19, or under age 24 if a full-time student.
- The child must not be able to provide more than half of his or her own support.
- You must provide more than half of the child’s support during the year.
If you meet these requirements, you can claim the child as a dependent on your tax return. You will need to provide the child’s name, Social Security number, and relationship to you on your tax return.
Excluding Foster Child Income from Your Taxes
Foster child payments are tax-free. This includes payments for the child’s food, clothing, shelter, medical care, and education. You do not need to report these payments on your tax return.
However, if you receive any other income from fostering a child, such as reimbursement for the child’s transportation or other expenses, you must report this income on your tax return. This income is taxable, and you will need to pay taxes on it.
Additional Resources
- Publication 501, Dependents, Standard Deduction, and Filing Information
- Earned Income Tax Credit (EITC)
- Child Tax Credit
| Income Type | Taxable? |
|---|---|
| Foster child payments | No |
| Reimbursement for child’s transportation or other expenses | Yes |