Foster child

[RLymanC]

In June my client took in a child, in December the paperwork for that child was issued and the child was legally a foster child. Does this make the child an elgible foster child for tax purposes? I can find nothing on this, so it could be like a live birth, Dec. 31 is OK.

2nd Question:Foster Care Payments

Foster care payments paid to a taxpayer by the State are not taxable if there is only one 6 year old child in the home.

My question: Is the money received by the parent and used for support of the household money provided by the qualifying child?

The support test reads that the child cannot provide over 50% of his own support. In this case is the child providing any of his own money for support?

[Bees Knees]

TTB page 3-15 says "A 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."

That doesn’t seem to indicate the paperwork has to be completed first, as long as the child was placed their by an agency.

TTB page 3-17 also says support provide by others includes foster care payments. That seems to be in the context that it is not coming from the child or taxpayer, but by someone else (such as the agency).

That means you would be fine under the Qualifying child rules where the child cannot have provided over half the support, but not so fine under the Qualifying relative rules where the taxpayer has to provide over half the support.

[Bees Knees]

1040 instructions on page 21 says the same thing. However, it does not put foster child under the category of exceptions to time lived with you. I would intrepret that to mean the child has to be their over half the year, which your situation seems to qualify since the child has lived there since June.

[S T]

More on Foster Care

T\P has a foster child. The qualified foster care agency pays $830 per month to T\P, $210 must go for the support of the child for clothes, allowance, school related and recreation, for which T\P turns in receipts to the Foster Agency, the balance of $610 is then used for extra expenses in the household for food, utilities, etc.

So how to apply to see if the T\P can claim Foster child as a dependent?

Sandy

[Bees Knees]

The T/P did not provide over 50% of the support. The agency did. So no qualifying relative.

However, under the qualifying child rules, the over 50% support is not a requirement. The only thing about support under the qualifying child rules is that the child cannot have provided over 50% of his or her support.

So it would appear the child is a qualifying child of the t/p even though the t/p never provided over 50% of total support.

[Koss]

Agree on both points

Foster care payments are considered support provided by "someone else," meaning support that is not provided by the child himself or by the taxpayer. For purposes of qualifying child, this actually proves that the child is not providing more than 50% of his own support. Assuming the other tests are met, I see no reason why the child would not be considered a qualifying child.

The text of the code and the IRS publications simply says the child must have been placed in the home by a court or agency. It doesn't say that the placement has to have occurred by a certain date.

I could play devil's advocate. It says the child must have lived in your home for more than half the year, and must have been placed in your home by a court or agency. So that could read to mean that the child must have been placed in your home by a court or agency for at least half the year. But that's an inference. That's not what it actually says. I lean toward the "born at 11:30 PM on 12/31/05," or "got married on 12/30/05," or "died at 1:18 AM on 01/01/05" interpretation.

The court order or action by an agency is an event that establishes a certain legal relationship. Viewed from this perspective, like a birth or marriage, it would not matter when during the year this event occurred, as long as the legal relationship remained in effect as of 12/31/05.

I have a client that usually comes in in late March. They are an unmarried-couple-kid-is-hers-but-not-his.

We need an acronym for this. I call it the "canonical unmarried couple," or CUC.

("Canonical" refers to a standard pattern. It's a term used by linguists and other flaming academics from fields no one has ever heard of.)

While I haven't abandoned my position that if she has no income the child is not her qualifying child, and can therefore be his qualifying relative, this particular couple has a different fact pattern.

In December, 2005 he became the child's legal guardian. But the child and her mother lived in his home all year. She actually worked, but earned under $3200.

Anybody see Jarhead?

I love this job...

Burton

[jainen]

I disagree

I disagree. No, not about the foster child. A lot of kids get dumped on a helpful friend or relative, and the paperwork follows in due course. Public policy supports the official registration of foster children. I don't think even the IRS is so cold-hearted it would punish foster parents who take care of the child first, and call in the bureaucrats after.

I disagree about canonical. It has too much of a sense of orthodoxy, which is the opposite of these relationships. I suggest we call them non-statutory families.

[Koss]

Non-statutory families

I disagree about canonical. It has too much of a sense of orthodoxy, which is the opposite of these relationships. I suggest we call them non-statutory families.

NSFs?

Maybe this explains why they all want RALs the first week in February...

Burton