[shy_bear]

I know this has been discussed many times!! But I am going to ask again. We have had baby A since June, when he was born. We thought we could claim him on our taxes, but my FIL, who is an accountant, says we can not. First, A does not have a social security number and he will not be legally adopted by the end of the year. Second, FIL told us that even if we were to get him a tax ID number that number can not be used to file extemptions. Lastly, FIL told us we are getting the monthly stipend to offset costs so therefore we can not claim him even if the other stuff was worked out. It is not that big of a deal if we can't claim him, we were just trying to be proactive.

Also, FIL is telling us we can not use the adoption tax credit since we did not have any out of pocket expenses. WE thought that b/c he is from fc that it was an automatic????
Thanks!!!!

[Familynotcomplete]

I'll be interested to read the responses.

From what we've been told that foster children are eligible for the tax credit.

And that once the adoption is final you are eligible to claim them on your taxes whether or not you get a subsidy for them. But if they are foster children for the full year then you can not.

[stevenstwin]

does it perhaps vary from state to state? I believe the consensus last tax time was that you could claim ANY foster child who was with you for at least 6 months, even if there was no adoption planned (but you did need the number). I'm just going by what I remember - I'm in Canada and we definitely can't claim them, as the reasoning is that we aren't actually supporting them financially.

[HappyMommy106]

The advice of your FIL is in disagreement with what it says on the IRS website. Others have posted the links, just do a search on "tax" or "IRS" on these forums.

I would speak with another accountant who has experience working with adoptive families.

[Boulderbabe]

What I've heard---and the principle I've used---is that if you provide more than 50% of a child's support over the year, you may claim the deduction.

You'll need to figure out the costs of supporting this child, including his share of the mortgage, car payment, etc. Then subtract the stipend you receive from DSS. If the remaining number is more than 50%, you can claim him.

That's how I understand it, anyway. But check with the IRS.

[excited2adoptsoon]

I just talked with my SW about the same issue. She is obtaining a social security number for my FD and she said once the child is place with you 6 months and 1 day, she is yours to claim. That's also what we learned in training.

I am in California if that matters.

[hkolln]

You will need a SSN number to claim him on your taxes as an exemption. And the more then 6 mos rule wouldn't apply since he was born in 2007 therefore Yes you can take the exemption (but you will need a SSN for him). If you can get his SSN then YES you can claim him. Use the "foster child" checkbox. So, get him a SSN so you can use him as an exemption. So, I'm sorry to say but I think your FIL is incorrect there.

And the income is NOT income...it is a stipend to care for the child so that has no bearing on you. You do not include that on your taxes.

And you CAN take the adoption credit. I think your adoption would have to be finalized in 2007 but yes you can take that too.

This is FEDERAL taxes so that should be across the board for all 50 states...not on a state by state basis. Now if you have state taxes I wouldn't know how to file those. I live in Florida which has no state tax.

I would consult with another accountant. I don't believe he's correct in his advice.

[eomaia]

I've been wondering about this too.

Although we've done everything we were supposed to do, I'm not sure if we'll get the kids back before they've been gone 6 months. Since they were bounced around like ping-pong balls for a couple months, if we don't get them back within a couple months, they won't have been at any one place for more than 6 months of this year, which I think would mean that not only could we not claim them (since we only had them until May 23rd) but that their foster family couldn't claim them either (since they didn't get them until August 5th). Of course we could really use the money, but I'm sure the foster family could use it too. It bothers me that it seems possible that no one will be able to claim tham because of DHS's mucking around and dragging their feet.

[Mkuhlmann06]

We received T as an adoptive placement. He was at his foster family for 6 mos 23 days. They will be able to claim him as a dependent. Even if we finalize the adoption, we can claim the adoption tax credit but CANNOT claim him as a dependent b/c he wasn't with us for 6 months AND someone else is claiming him.

*IF* the foster family does NOT claim him as a dependent, then we can, but they have the right to first. I haven't asked them if they are or aren't. I called the IRS directly and spoke with a specialist in this area. He and I spent 40 mins on the phone.

If you get a SSN, and he's been with you for 6 months you can claim him as a dependent. The monthly stipend you collect IS NOT INCOME and you do NOT include that on ANY TAX documents. The year you finalize is when you claim the adoption tax credit. Sorry, but I think your FIL is incorrect.

[stevenstwin]

Originally Posted by Mkuhlmann06

The monthly stipend you collect IS NOT INCOME and you do NOT include that on ANY TAX documents.

And yet that sort of is the reasoning here in Canada. The stipend is tax-free, so we don't have to claim it as income. BUT it makes the government the one supporting the child, since they give us the stipend to supposedly cover all expenses, so they are NOT considered our dependents. Too bad - I could use the little extra!

[Chancey]

I have posted about this in the past... and have claimed foster (NOT adopt) children for two years straight! You absolutely can claim foster children as a dependent if they are in your home for six months or more. The test for dependent states that the child can not supply more than half their own support... which of course the child does not, CPS does.

We even messed up on our taxes the first year by not claiming the child, then re-filed with the foster child claimed. We had to put in an explanation of why we were correcting our return "claim a foster child" and the IRS had no problem with it at all.

Here is the website direct from the IRS
Publication 501 (2006), Exemptions, Standard Deduction, and Filing Information

[hkolln]

Originally Posted by Chancey

IYou absolutely can claim foster children as a dependent if they are in your home for six months or more.

And the original poster stated the child was born in June which means he is automatically an exemption to them. Just as if you have a child that is born in December of 2007, they are automatically an exemption just because they were born on Dec 31st or earlier of that year the taxes are filed for. The 6 month + rule would not apply to babies born in the year the taxes are filed.

[shycar]

Its exactly what boulderbabe said. The child has to live with you for 6 months and you have to prove that you provided more then 50% of what the state gives you and have a ssn. But I think you said that you will probably adopting by the end of this year, so if he is adopted this year then you can claim him as your own not a foster child.

Also on the adoption credit...yes you can get the adoption credit. If he is adopted through foster care and you recieve a adoption stipened then he would be considered special needs child and you will get adoption credit with any special needs adoption. We got for both of our kiddos.

[Boulderbabe]

Careful on taking the special needs deduction! Not every foster kid qualifies for the special needs adoption tax credit. You need a form that says that the child is qualified as Title Whatever (VI-E, or something like that?) so that you can take the deduction.

You should ask for this during the subsidy negotiation meeting.

[vegaschristina]

Don't rund down to the social security office wtih your foster kids to get them a number! They most likely already have one, you just need to ask the CW for it and let them know why you need it. Last year, I was able to claim my FS but not my FD becuase we'd not had her but a few months.

On the tax credit for special needs adoption, when we were adopting our daughter, they actually went thru a questionaaire thingy and told us that she qualified as a special needs adoption.