FOSTER CHILD

[Joann]

HELP!! i am drawing a blank. Taxpayer had foster child in her home since July of 2008 until November 15, 2009. Can she claim foster child for 2009. Somehow, I have it in my head that a foster child must be in the home all year to qualify, but I am not finding that anywhere.

Joann

[rfassett]

In order to claim the foster child, he/she has to meet the dependency criteria. A foster child (if placed by a legitimate agency) passes the relationship test. The residency test says the qualifying child must live with the taxpayer more than half the year. And then you have to pass the age requirement, the support test and the joint return test. If your situation meets these criteria, I know of nothing that would dis-qualify your taxpayer from taking the exemption.

[Joann]

Thank you rfassett for the very quick reply. Much appreciated.

Joann

[jainen]

>>a foster child must be in the home all year<<

My understanding is that an "eligible foster child" (placed by government agency or court decree and treated as the taxpayer's own child) qualifies with the same rules as a natural child. That could be either qualifying child (more than 6 months) or qualifying relative (any period, since she is deemed to be a relative). Otherwise, an unrelated person would have to live there the whole year.

In your case, the child did not live in the home long enough to be a qualifying child. Frankly it sounds to me like an emergency protective placement, not treated as taxpayer's own child. I would guess the exemption is not available.

[Medlin Software, Dennis]

One other item to note - if the foster parents do take the dependency, they have to also report all monetary reimbursements received as income.

At least for me, it was/is better not to take the dependency and keep the reimbursements as non-reportable...

[Lion EA]

Why doesn't the January to November 2009 qualify the foster child? I can see that the July to December 2008 might not work.

[jainen]

>>Why doesn't the January to November 2009 qualify the foster child?<<

Because I misread the post and didn't notice that it covered two years, that's why! Just like with my own clients.

[Lion EA]

We tax preparers never know what year it is; we're always working in the past. When I say, "this year," it means 2009 when I'm working on a 2009 return. When my client says, " this year," it usually means 2010. What we have here is a failure to communicate.

[Randall]

One other item to note - if the foster parents do take the dependency, they have to also report all monetary reimbursements received as income.

At least for me, it was/is better not to take the dependency and keep the reimbursements as non-reportable...

Do you have a reference on this?

[Medlin Software, Dennis]

Do you have a reference on this?

In my case, the amount received as foster care payment plus the amount of medical expense paid by the county/state was more than the amount of financial support we provided, so we failed the support test.

[Randall]

In my case, the amount received as foster care payment plus the amount of medical expense paid by the county/state was more than the amount of financial support we provided, so we failed the support test.

So are you saying the support test is the key? As long as the client is providing more than what he's receiving for the child, he passes the support test, can claim the dependent and not report as income the receipts? This is how I was seeing it.

[kcjenkins]

http://www.taxalmanac.org/index.php/Sec._131._Certain_foster_care_payments