Dependent?

[Tax Prep by Deb]

I have a client who for the last 8 years was able to claim a child as a foster child on their tax return. This child was placed in their custody through the courts and they had complete guardianship of him. The first several years the boys father tried to claim him as well and as a result my clients always had to paper file, then when the letters came support their claim and they always won. As far as they are concerned this boy is their son.

The question comes up now about dependancy because he is over 19 but is a full time student. Can they continue to claim him as a foster child? The reason this is important is because this is the first year he has worked. He earned a little over 4,000 which would no longer qualify him under the qualifying relative. I am hoping he can still be claimed as a qualifying child as my clients have supported him even paying for his tuition for college which was substantial.

Any thoughts would be greatly appreciated!

Deb!

[mcb39]

But, isn't he still a Qualifying Child. He seems to meet all the requirements for qualifying child.

[Medlin Software, Dennis]

Be VERY careful. I am a CA foster parent. To claim a foster child as a dependent, one would have to report any foster care payments from the county as INCOME, which can very well be the worst choice. It is pretty hard to pass support test when reporting foster care payments as income, as well as increasing taxable income!

I have NEVER personally had a better tax situation by claiming a foster child as a dependent when receiving any foster care payments/medical coverage from the county/state.

Even in "family" foster placements (grandkids, niece/nephew, etc.) the county/state might be providing financial support to foster parents.

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Other:

The counties I have received payments from have never given me a 1099.

There can be additional "support" for foster kids, funds for clothing, medical care, etc., which might be subject to calculation in any support test.

There are so many factors, one has to dig deep. A signed statement from TP documenting support (or lack of) from the county/state might be in order (maybe not for age 19, but for the previous years...)

[Tax Prep by Deb]

My clients have never received any payments whatsoever for taking care of this child. He was simply placed in their care by the courts in lieu of being placed with a family who didn't know him as is the case with most foster care situations. This child happened to be the child of a friend of theirs who either did not want him or wasn't taking good care of him.

I agree that with typical foster care where the host family is given money to care for the child, there usually is not a dependancy issue, but this was not the case with my client.

Deb!

[Medlin Software, Dennis]

Sometimes miracles happen! That is (no money from county = no one going after dad for reimbursement) probably why dad tried claiming as dependent too. Must have been a strong friendship.

[GLJEANNE]

Foster children follow the same exact rules as other children, so from what you've said, if they still supported him more than 50% then he's still their dependent.