Foster and Adoptive Parent Tax Information

[dseger]

The National Foster Parent Association has posted a new document titled: FEDERAL TAX BENEFITS - FOSTER, ADOPTIVE PARENTS AND KINSHIP CAREGIVERS

Here's a link to the NFPA home page which has a link to the document.
http://www.NFPAonline.org

Or you can use this link to open the PDF document directly:
2007_Federal_Tax_Benefits.pdf (http://www.nfpaonline.org/uploads/2007_Federal_Tax_Benefits.pdf)

[usnsjf]

The agency I am with sent the Tax Guide for foster/adoptive parents and kinship caregivers. After reviewing it, I believed I could claim my foster son as an eligible child. I email our caseworker requesting his social security number explaining why. Below is an excerpt from the response I received:

I was told that it was preferred that foster children not be claimed in your taxes because their care is paid for by the state by funds that are non-taxable. We wouldn't be able to provide a W-2 form because of that. Plus, I was told by another co-worker that we could not give out the child's social security number if it was to be used for these purposes; which was stated by our Area Director. However, I do understand this must be confusing given that XXXXXX(my agency) sent out that email.

Did I misunderstand the tax guide or has my agency not had a chance to read up on it? We really don't need the money, it would be used to futher spoil the adorable baby we've been blessed enough to foster, but I'm sure there are families with my agency that really could use the money. Those families may get the same response I did and accept what they are told. I guess what I'm asking for is a layman's translation on the topic so I can be more informed. Thank you in advance for your time and assistance!

[dseger]

It is usually difficult to have a foster child qualify as a dependent due to the fourth qualification:
4. You must provide more than half (50%) of the person's total support for the year. The support test can be a challenge, because all payments for cost of care reimbursement, all adoption assistance payments and TANF, SSI or other cash assistance count as support, but not support provided by the taxpayer.
To do this you need to be prepared with documentation showing that you spent more than twice the amount you received in reimbursement from your agency.

Regarding the Social Security number of the child, that is a very interesting question. You need the SSN to claim a dependent. But can the agency give that number out? Can they say NO for confidentiality reasons? Does anyone else know about this?