[mamasoon]

Hello all, we have had our boys in our home since January of last year and I have been told that we claim them as dependents. Our adoption is not final, we hope to be finished by March. What info do I need to provide to prove them as such when filing Income tax? What does this mean as far as claiming them? I have never had anyone to claim before so please excuse my ignorance.

thank you,
Kathy

[Cleopatrick]

First of all, I'm NOT a tax accountant. This is MY understanding of how it works to claim foster children as a dependant. You want to call a tax accountant and find out what they say.

If I'm not mistaken, you can only claim a foster child as a dependant if 1) they lived with you for the full year and 2) you can show they you paid more money for their care then the state did. If the state gives you $250.00 a month for their care then you have to show you paid $251.00 a month out of your own pocket for a total cost of living on the child of $501.00 per month. To do this, you have to itemize your taxes. You would take your house payment and divide it by the number of people in your home, any groceries you bought, toiletries, gas for taking them places, ect. You will also have to have reciepts. We actually have an adpopted daughter that we can't claim on our taxes. We recieve an adoption subsidy for her because she is severely multiply disabled. We don't provide more money for her care than the state does, so we don't claim her.

Once again, I do NOT do taxes, even my own. I pay someone else to do them. You should call someone who does and have them tell you whether or not you can do this.

[leenab]

you need to have their SS numbers or get ATINs.. Were they placed in your home for adoption? You also have to be able to show that you provide for more than half of their needs financially. The IRS website is a good place to look for all of the specifics. Since they're not yet adopted you may want a letter from your state that they're placed with you for the purpose of being adopted. (although i don't think it's required). From reading the IRS website it is my understanding that a foster child must live in your home for the entire year of 2004 to be able to be claimed as a dependent. Otherwise they're considered to be a charitable deduction. But children place for adoption are in a different category.

[mom2GRLC]

The kids don't have to be in your home a whole year. They have to be in your home at least 6 months and 1 day. All you need is their name and ss#. If you don't have the ss# then you can ask the social worker.

It is best to do your taxes right away. Sometimes the parent will still claim the child..and if they did their taxes before you you might run into some problems.

That happened with our first foster child. When we went to claim her on our taxes...our tax guy said she had already been claimed. He said we could claim her also..then the government would have to...take it's time straightening things up...or He said if we wanted our tax returns right away...then just not to claim her right now. Talk to the parent and ask her to hand over the money....or we would have to file some kind of paper work ..and bring her to court.......that would make the IRS do an audit. When they found out she claimed the child when she shouldn't have...she would have fines as well as not be able to claim another child for 5-10 years(can't remember the exact time). We couldn't get across to the parent...and ultimately decided the money wasn't worth it. We would just make sure not to make that mistake in the future.

[Nixie]

I work with DSS in SC. I simply write a letter for my foster parents, which lists when the agency placed the child and the child's SS#.
My understanding has been that it was 4-6 months and then I have heard whoever has cared for the child the longest in the last year.
The best thing to do is talk with a Tax Accountant. They are more knowlegde about the rules. I would recommend having your SW simply write a letter and listed their SS#. But the experience I have had is the foster parents needed to jump on filing ASAP, because some of these bio-parents will file. When this has happened to my foster parents, the IRS has paid the foster parent and then would be responsible for collecting it back from the parent. Also, my understanding is you do not count their monthly board check, because it is the child's income.

[TexasJingles]

I'm glad someone asked that question! I hadn't even started thinking about taxes!

I think the 1st think an important point would be if they are foster, foster/adopt, or adoption. There may not be monthly stipends for straight adoption to "muddy" the waters.

[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.

[jolean12]

I had the problem last year when the ** claimed our baby (with us all of 2003...came to live with us at birth June 2002). What we had to do was file our regular taxes without her, we then filed an amendment and got a note from DCFS that she had been with us the entire year, due to this we did not get that return back until November.
Another thing, if you are close with a birth family and they will sign a form you should be able to claim that child whether or not they were with you an entire year.

[mamasoon]

All of you have posted great info. Thank you Riley for the details. I had no idea I would have to prove support in order to claim the child as a dependent. How would I go about this? Also what is the deduction for dependents? I am a little peeved that I was not prepared for this. The boys were placed in our home to be adopted, though TPR didnt happen until June for birthdad and Dec. for birthmom.
I wonder if there is a worksheet for something like this?

Thank you for posting,
Kathy