[riley6]

I just ran a fosterparent in-service on this, so I've done all the research and have talked to the IRS extensively on this.

There are several separate issues here. I'll start with claiming fc as dependents. In order to claim a FOSTER CHILD as a dependent, the child must have lived with you the ENTIRE year, from January 1 through Dec 31! You must also be able to prove that you paid 51 % of the child's support. So if your monthly subsidy is $300 per month, you must be able to prove you spent $601 per month on the child ($301 out of pocket). You can do this by dividing your mortgage and other household expenses by the number of people in the home.

If you want to claim the child for purposes of Earned Income Tax Credit, the child must have lived in your home for at least SIX months.

It is not true that someone must claim the child and the one who has had him the longest gets to. Two people can potentially claim the child for EITC, they just both have to prove that the child lived with them for six months, so a family 1/2 the year and a ff the other half. There are cases where NO ONE can claim the child as a dependent, bc no one had him the ENTIRE year.

Now, if the child was placed with you for the purposes of adoption OR the goal for the child was changed within the year and you signed INTENT TO ADOPT papers for the child during the year, you can claim the child as a dependent for the year, IF you can also prove that for the time you had the child, you paid for more than 1/2 the child's support. It's just like claiming a bio child that was born during the year, you get to claim the child even though he didn't live with you for the entire 365 days.

If you adopted a child during the year you can claim the child as a dependent even if he didn't live with you for the entire year, just like a baby born during the year is a dependent.

The adoption and foster care subsidies are NOT included as income, but ARE used to determine if the child qualifies as a dependent or not, bc they are figured in as support. You must have contributed at least one dollar more than the subsidy to support the child.

I think I've covered all the areas. If you have any questions, you can go to irs.gov and type in the words "dependent" and "adoption" and "foster children". It will explain everything with examples.