Foster Child

[RLymanC]

Child was born August 10th 2011 and placed in the home of my client by an agency as a “Foster Child” Sept. 05, 2011.

Is this a qualified “foster child” for tax purposed? There would be EIC and CTC involved.

The child may not even be qualified to go on the tax return at all, that is the question.

[Gary2]

Child was born August 10th 2011 and placed in the home of my client by an agency as a “Foster Child” Sept. 05, 2011.

Is this a qualified “foster child” for tax purposed? There would be EIC and CTC involved.

The child may not even be qualified to go on the tax return at all, that is the question.

Where was the child living between August 10 and Sept. 5?

[S T]

Foster Child

See TTB 3-18 - Foster Child is any child placed with the taxpayer by an authorized placement agency or by judgment, decree or other order of any court of competent jurisdiction.

I also used the Qualifying Relative Chart on TTB 3-15 (presuming not a qualifying child of another, no gross income, but then have a CFS worksheet for Qualifying Child - all indicate the child could be treated as a "qualifying child" for dependency, child tax credit, dependent care credit, EIC and HOH - Another would be the Dependency Exemption worksheet which asks if the Child is a US citizen?

I believe if the conditions are all met, the child would qualify as a dependent and some of the other credits.

[FEDUKE404]

Question

There is a difference between a child being placed (usually temporarily) in a "foster home" versus going through the legal process of becoming a "foster child."

It is so far unclear to me exactly which situation applies here.

Based upon the facts given, if the infant has indeed been permanently transferred to the parents, as a "foster child," then I would go with all available benefits.

Let us know!

FE

[Gary2]

Perhaps I need to call attention to the residency test, which is what I thought was the main point of the question.

Obviously the child didn't live with the new foster parents for more than half the year, so the question is whether the exception for children born during the year applies. If the baby went home from the hospital with a birth parent, and then was removed to be placed with the foster parent, that would be a good indication that the exception wasn't satisfied. But if the baby was in the hospital the entire time until being placed and sent home with the foster parents, the question is much more interesting.

[Koss]

Definition

I agree with Gary2's observation that we need to know where the child was prior to being placed with the taxpayer.

FEDUKE 404 wrote:

There is a difference between a child being placed (usually temporarily) in a "foster home" versus going through the legal process of becoming a "foster child."

Placement by an agency IS the "legal process of becoming a foster child."

A state agency, which is usually called the Department of Children and Family Services, or something similar, has statutory authority to place a child in a foster home. The courts may or may not be involved. But if the agency uses its authority to place a child in a foster home, then that's a foster child as the term is defined under the tax law.

FEDUKE 404 wrote:

Based upon the facts given, if the infant has indeed been permanently transferred to the parents, as a "foster child," then I would go with all available benefits.

A foster child placement is never permanent. It may last several years. But the agency or the court almost always has the authority to terminate or change the placement. And the natural parents, or even the child, through an advocate, can ask for the placement to be terminated. Foster parenting, by definition, is a provisional, temporary solution.

Even if the state agency seeks to terminate all rights of the natural parents, that does not make the foster placement permanent. A foster parent has most of the rights and responsibilities of a natural parent, but it's definitely not the same. Usually the state pays foster parents, or reimburses them for expenses of caring for the child.

When it's permanent, it's called an adoption, and that's a whole different concept.

A foster child does not inherit anything upon the death of a foster parent, unless it is specified in the will. And if the foster parent dies, there is no presumption that the child will be taken in by family members of the foster parent.

There is no such thing as permanent placement in a foster home. It isn't that kind of relationship.

BMK

[RLymanC]

Follow up on Foster Child

The child was born Aug. 13th and lived with the mother until Oct 14th, at that time the agency took custody and placed the child in my clients home, but not as a foster child.

On Nov. 21st the legal placement paper where issued by the agency making the child a legal foster child for tax purposes.

The IRS seems to think the child is a QR not a QC.

[dan doshan]

The child was born Aug. 13th and lived with the mother until Oct 14th, at that time the agency took custody and placed the child in my clients home, but not as a foster child.

On Nov. 21st the legal placement paper where issued by the agency making the child a legal foster child for tax purposes.

The IRS seems to think the child is a QR not a QC.

I agree with the IRS. A Foster child must have been in your home for 6 months from the date placed by a qualified agency in order to meet the test of a qualifying child. Could even be questionable as to being a QR, as to whether or not the foster parents could meet the over 50% of support test.

Exception could possibly be that if the child was placed by a qualified agency right after birth then I'm not so certain if that could possibly override the 6 month residency requirement as to then meeting the qualifying child test.

[FEDUKE404]

Well, what I meant....

I agree with Gary2's observation that we need to know where the child was prior to being placed with the taxpayer.

FEDUKE 404 wrote:



Placement by an agency IS the "legal process of becoming a foster child."

A state agency, which is usually called the Department of Children and Family Services, or something similar, has statutory authority to place a child in a foster home. The courts may or may not be involved. But if the agency uses its authority to place a child in a foster home, then that's a foster child as the term is defined under the tax law.

FEDUKE 404 wrote:



A foster child placement is never permanent. It may last several years. But the agency or the court almost always has the authority to terminate or change the placement. And the natural parents, or even the child, through an advocate, can ask for the placement to be terminated. Foster parenting, by definition, is a provisional, temporary solution.

Even if the state agency seeks to terminate all rights of the natural parents, that does not make the foster placement permanent. A foster parent has most of the rights and responsibilities of a natural parent, but it's definitely not the same. Usually the state pays foster parents, or reimburses them for expenses of caring for the child.

When it's permanent, it's called an adoption, and that's a whole different concept.

A foster child does not inherit anything upon the death of a foster parent, unless it is specified in the will. And if the foster parent dies, there is no presumption that the child will be taken in by family members of the foster parent.

There is no such thing as permanent placement in a foster home. It isn't that kind of relationship.

BMK

Sorry to step into the "technical world" with which you obviously are quite aware.......

My only point was the distinction between a child who, for whatever reasons, enters the care of a foster custodian. Obviously very few things in this life are "permanent."

A specific client has, over the years, had several "foster children" under her roof. Most were short term issues (parental abuse/drugs/whatever). My client would never have considered any tax dependent considerations, and adoption was never on the table. Client is just basically a good person. IIRC, she also received funds from the agencies for care of each child.

I did not discuss any nitty gritty stuff as to what government agency put child(ren) there, nor what legal documents were prepared, nor whether anything was "permanent." I did make the assumption that some sort of at least not illegal process had occurred prior to the arrival of any child.

But I also remember the days of not too long ago when it was likely (I worked some for a firm with high percentage of EITC clientele) that just about any DNA-bearing person under the age of 25 might be claimed as a "foster child." Thankfully, those days are behind us after the IRS tightened up the definition.

That was my main point....in so many words stating there is some threshold to cross for proper consideration as a "foster child" for tax purposes.

BTW: Are you a lawyer????

Think I'll crawl back into my shell now and do something much more productive..............

FE

[taxea]

The child was born Aug. 13th and lived with the mother until Oct 14th, at that time the agency took custody and placed the child in my clients home, but not as a foster child.

On Nov. 21st the legal placement paper where issued by the agency making the child a legal foster child for tax purposes.

The IRS seems to think the child is a QR not a QC.

It seems this would be similar to an adopted child. Can the TP take dependency for a child that wasn't adopted until late in the tax year or must the TP wait until the following year?

[dan doshan]

It seems this would be similar to an adopted child. Can the TP take dependency for a child that wasn't adopted until late in the tax year or must the TP wait until the following year?

I had a situation 2 years ago. A taxpayer had taken in a friends child for some reason, can't recall now. The child lived with him for 2-3 years. Late in 2009, (Sep or so) the child was finally legally placed in his custody. I read everything I could find, questioned others, etc. Got answers all over the place. Finally submitted the situation to our Tax Research Dept. There answer was, that although the taxpayer could claim the dependentcy as in past years (qualifying relative), the child would not be a qualifying child because he did not live with the taxpayer for more than 6 months as a legally placed (authorized agency, court decree etc.) foster child.

An adopted child is somewhat different in that they are always considered your child. But just how that might change the outcome or treatment if one adopted say a 3 year old on Sep 1 of the year, I really can't quite sort out at the moment.