Foster Child

[Gretel]

I just read what I could find on foster care payments in reference to the support test.

My conclusion: If T/P receives payment from the state for foster care for one child this child is a qualified child for all purposes since these payments are considered to be provided by agency not by child.

Somehow I thought, these payments were considered support provided by child and only EIC could be claimed.

WWYS (What would you say?)

[skhyatt]

Others

Foster care payments are considered support provided by others. See TTB 3-19

[Koss]

Foster Care Payments

My understanding of the current IRS position on this matter is as follows:

(i) The test for qualifying child is not whether the parent provides more than half the child's support, but rather whether the child provides more than half of his own support.

(ii) Foster care payments are treated as support provided by the government--not by the child himself.

(iii) Likewise, money, products and services such as Medicaid and food stamps are treated as support provided by the government.

(iv) Social Security benefits that flow from the work record of a deceased parent are treated as the child's own funds. This means that the money is treated as support if the money is actually spent on the child's needs during that year, but it is not treated as support if it is not spent during that year.

Other fact patterns exist, such as a child with massive amounts of money that came from life insurance proceeds or compensation for the wrongful death of the parents, or some other type of settlement or award. In these cases, the money is treated as the child's, and such a child may well be providing more than half of his own support.

Burton M. Koss