[its_a_small_world]

So, this is our first time claiming DS as a dependant on our taxes (he wasn't with us for 6 mos last year).

Since we get a subsidy based on his special needs, do we claim this? Does it qualify as providing more than half of his support for the year?

I'm doing Turbo Tax, nobody can seem to help me. What has everyone else done?

[Mystik]

Foster Care & Adoption Assistance subsidies are NOT taxable, so don't claim them. All you need do is add him as a dependent and if he's still a foster child there is literally an option to select "foster child". All you need to have is his SSN to do this and be able to prove he's been with you over 6 months if the IRS should ask.

[dachshunds4you]

It's sounds like you said he was not with you for 6 months. He needs to be with you 6 months and 1 day in order to claim him as foster child. If he has not then you can't claim him.
As mentioned you only need his ss #. Foster parents do not claim our monthly payments we receive.

[DianeS]

Are you saying you've had your DS for the entire 2008 tax year? Your comment about not having had him for six months "last year" seems like it could be applying to 2007 or 2008, which is a tad confusing.

If you've had him in your home more than half of 2008, or if you adopted him in 2008, then yes he gets claimed as your dependent for your 2008 taxes.

The IRS rule about support is that the CHILD can not have provided more than half his own support for the year. Unless your DS has a really good job and pays you a high amount of rent, you're in the clear. The money the state sends you is support paid by the STATE, which is not the same thing as support paid by the CHILD.

And no, you don't ever claim the subsidy you receive for caring for a foster child as income. That subsidy money doesn't show up anywhere on your taxes.

Hope that helps!

[Katwoman555]

Be very careful claiming a foster child on your taxes. Here in Iowa, even if they are in your home for a year, the bio parents can claim them as they are still their child. I had big issues that are still not resolved for 2007 taxes. Why? Because I adopted my daughter on June 5th 2007. She had been with me since Oct 2005. She had been with me for all of 2006 and 2007. I got fined and still owe them according to the IRS. They are investigating as he filed after TPR occured. TPR was Oct 2006! He filed for her in 2007. I am confident that I will prevail as I legally adopted her in 2007. At that point she had been mine for over a year and he had lost custody of her when he claimed her in 2008 for his 2007 taxes. I sent in copies of her birth certificate and adoption papers. I am on "hold" right now. They MAY give me the credit back and I won't owe anymore, but going in now to file for 2008, I am going to get money back and still have to pay for the back I owe them. He will probably get in big trouble for this. At least I hope so. Cause I am if he's not and it's my child now! I had the legal right to file!

[Chancey]

Originally Posted by Katwoman555

Be very careful claiming a foster child on your taxes. Here in Iowa, even if they are in your home for a year, the bio parents can claim them as they are still their child. I had big issues that are still not resolved for 2007 taxes. Why?

I have claimed different foster children for the last three years on my taxes and have NEVER had an issue. The law states that if they are with you more than 6 months you have the right to claim them, even if you are "only" their foster parent. I think your problem has stemmed from the birth parent also claiming them in addition to you. I don't see how the State of Iowa could supercede the IRS's rules in how you are allowed to claim on your federal taxes.

[DianeS]

Originally Posted by Katwoman555

Be very careful claiming a foster child on your taxes. Here in Iowa, even if they are in your home for a year, the bio parents can claim them as they are still their child. I had big issues that are still not resolved for 2007 taxes. Why? Because I adopted my daughter on June 5th 2007. She had been with me since Oct 2005. She had been with me for all of 2006 and 2007. I got fined and still owe them according to the IRS. They are investigating as he filed after TPR occured. TPR was Oct 2006! He filed for her in 2007. I am confident that I will prevail as I legally adopted her in 2007. At that point she had been mine for over a year and he had lost custody of her when he claimed her in 2008 for his 2007 taxes. I sent in copies of her birth certificate and adoption papers. I am on "hold" right now. They MAY give me the credit back and I won't owe anymore, but going in now to file for 2008, I am going to get money back and still have to pay for the back I owe them. He will probably get in big trouble for this. At least I hope so. Cause I am if he's not and it's my child now! I had the legal right to file!

I'm sorry you are going through this; somebody is obviously not doing their job.

The federal tax law is very clear on who gets counted as a taxpayer's dependent. And the foster parent who has cared for a foster child in their home for more than half the tax year (assuming the child is a US citizen and did not pay more than half his own support) is allowed to be claimed by the foster parent.

Federal tax law is also very clear on who can not claim a child as a dependent, and bio parents who did not have the child in their care for half the year do not get to claim the child. The state of Iowa has nothing to do with federal tax law, the IRS has an entire section dedicated to "Definition of qualifying child" that outlines who can and can not be claimed.

I certainly hope you have official documentation to back up what you told the IRS. What you are describing is not the normal way the IRS operates, BTW. Usually when two people both file with the same dependent, the IRS requests documentation from both, and waits to receive that documentation before assessing fines. And if the mistake was made "in good faith", then no fines are assessed at all. (Although the party that claimed the deduction incorrectly is expected to pay any monies received back to the IRS, along with accrued interest).

I hope you've hired a tax lawyer at this point, Katwoman. You're being treated very badly.

[lyly]

I'm a little confused, I have two girls with me and if they stay with me for 6 months and 1 day i can claim them? But I can only claim them if i provide more then half of the stipended i receive for them? The foster care stipended where i live isn't great but I don't have to put any of my own money on the children unless i want to. I work ft and also a foster parent. So would i be able to claim them?

[hkolln]

Originally Posted by its_a_small_world

So, this is our first time claiming DS as a dependant on our taxes (he wasn't with us for 6 mos last year).

Since we get a subsidy based on his special needs, do we claim this? Does it qualify as providing more than half of his support for the year?

I'm doing Turbo Tax, nobody can seem to help me. What has everyone else done?

I use turbotax every year. You claim him as a dependent (choose "foster child" if he's still a foster child or "son" if he's been adopted). You'll need his SSN too and it needs to match his name.

And NO you don't have to claim the subsidy. That is tax exempt similar to child support.

[fredalina]

Originally Posted by lyly

I'm a little confused, I have two girls with me and if they stay with me for 6 months and 1 day i can claim them? But I can only claim them if i provide more then half of the stipended i receive for them? The foster care stipended where i live isn't great but I don't have to put any of my own money on the children unless i want to. I work ft and also a foster parent. So would i be able to claim them?

i am definitely not a tax expert, but i think the reason you get to claim even if you don't put your own cash toward the kids (and don't have to prove it if you do) is that you still provide a household for the kids which is presumably at least one bedroom larger than it would be if you didn't foster. You still provide a car that has room for the kids. You still provide gas for visits and appointments. And there's ALWAYS extra expenses even if you don't really think about it that way.

[DianeS]

Originally Posted by lyly

I'm a little confused, I have two girls with me and if they stay with me for 6 months and 1 day i can claim them? But I can only claim them if i provide more then half of the stipended i receive for them? The foster care stipended where i live isn't great but I don't have to put any of my own money on the children unless i want to. I work ft and also a foster parent. So would i be able to claim them?

If your two foster children stay with you for more than half the year (forget the "six months and one day" thing, it is not accurate, and count the number of days - it has to be 183 or more days),
AND IF they are USA citizens,
AND IF the children did not pay more than half their own support (nobody cares who actually paid it, as long as the child didn't have a job and pay it herself)
If those three things are true, then yes those two foster children are your dependents according to the IRS and you claim them as dependents on your federal taxes.

You ignore the stipend/subsidy money that you receive for caring for a foster child. Completely. Totally. It is nontaxable income and is irrelevant to the IRS. That sounds like an overstatement, I know, but it is correct. You do not have to put stipend/subsidy money you receive for caring for a foster child on your taxes as income. Stipend/subsidy money does not count as the child paying his own support. It literally does not count as far as the IRS is concerned.

[its_a_small_world]

Thanks for all of your replies! Sorry about the confusion, he was with us for all of 2008, only with us for 4 mos of 2007.

Turbo Tax rejected our e-file because someone else is claiming him. That is why I was confused in the first place. So... we have to file by mail and the IRS will be contacting everyone who is claiming him for proof of living arrangements. The SW we work with is a amazing and will be providing us letters of proof to mail with our tax return. Not that we couldn't prove it, but I would rather be extra careful.

Not sure who is claiming him, maybe Bio Mom/Dad or perhaps someone typed in their dependants ss# wrong, who knows! What a pain in the neck!

[millie58]

really??? I was told in MAPP class and it was in the IRS guidebook that we could claim foster kids if we had them for 6 months.

Originally Posted by Katwoman555

Be very careful claiming a foster child on your taxes. Here in Iowa, even if they are in your home for a year, the bio parents can claim them as they are still their child. I had big issues that are still not resolved for 2007 taxes. Why? Because I adopted my daughter on June 5th 2007. She had been with me since Oct 2005. She had been with me for all of 2006 and 2007. I got fined and still owe them according to the IRS. They are investigating as he filed after TPR occured. TPR was Oct 2006! He filed for her in 2007. I am confident that I will prevail as I legally adopted her in 2007. At that point she had been mine for over a year and he had lost custody of her when he claimed her in 2008 for his 2007 taxes. I sent in copies of her birth certificate and adoption papers. I am on "hold" right now. They MAY give me the credit back and I won't owe anymore, but going in now to file for 2008, I am going to get money back and still have to pay for the back I owe them. He will probably get in big trouble for this. At least I hope so. Cause I am if he's not and it's my child now! I had the legal right to file!

[hkolln]

Originally Posted by its_a_small_world

Turbo Tax rejected our e-file because someone else is claiming him.

Same thing happened to my brother (who is divorced and has 1 child). When he went to file the IRS rejected his return and he called them and they told him to mail in a paper return and they will issue his refund. Then in November timeframe they will issue letters to both people whom claimed his son and request confirmation they can claim him. My brother (in the divorce decree) is supposed to be claiming him but he thinks his ex is also. Should be interesting!