Foster parenting can be one of the most challenging and rewarding things that you will ever do from an emotional standpoint. The IRS provides some financial benefits as well. While there are no specific tax credits for being a foster parent, foster children are allowed the same treatment as biological or adopted children in many cases. These credits are all effective for the 2017 tax year.
Child Tax Credit
The IRS allows you to take a child tax credit of up to $1,000 per child living in your home. Foster children who meet certain rules qualify you for this tax credit as well. The child must be under 17. He must not have provided more than half of his own support. You must claim him as a dependent on your tax return, and he must have lived with you for over half the year. This credit is non-refundable, meaning that it will clear your tax liability but will not cause you to get a refund.
Additional Child Tax Credit
If you are not able to claim the entire child tax credit due to the total credit being higher than your tax liability for the year, you may be able to claim the remainder of the credit as an additional child tax credit. For married taxpayers filing jointly, the additional credit is the lower of 15 percent of your income less the child tax credit threshold or any child tax credit that you could not use because the amount was over your tax liability for the year. The child tax credit threshold is generally $1,000 for each child in your household. Use IRS Schedule 8812 to calculate the refundable portion of the credit.
Video of the Day
Brought to you by
Related pagessample food donation request letter food stamp application texas theory of interest rate parity penile lengthening surgery cost ira withdrawal tax calculator stock ticker symbol list joint checking account wells fargo difference between accruals and prepayments walmart fico score sell plasma austin think or swim desktop enhanced recovery collection agency nys tax id number lotto annuity auto loan simple interest ingress and egress easement form fica hi tax what is double declining balance method married filing separately itemized deductions split tradeline credit apply for food stamps in tennessee calworks cash aid how bad does foreclosure hurt your credit usps forgot tracking number what is libid is a debit card savings or checking donate appliances to charity cheap cabins in ohio bank of america debit card cash advance fee cash crops definition what is fica wages how to activate visa debit card cosmetology pay rate mortgage joint tenants calculating savings bonds do emancipated minors get financial aid walmart donation form medicare offices sydney locations maturity amount calculator dnrcca snap illinois application status indiana state tax refund status dfas london ky how to check if a money order has been cashed line 32 ira deduction what an appraiser looks for laptop tax deduction state of minnesota quit claim deed pros and cons of issuing bonds fake debit card numbers with security code usps postal money order tracking pod in banking mega millions payment calculator pregnancy medicaid sc td easy wev check car vin free roth 401k deduction easement ontario judgement for credit card debt installment laptop how to calculate tsr what states participate in the mega millions lottery default risk premium calculator tied tubes reversal cost expired prepaid visa card what does pod stand for in banking how to check balance on debit card mastercard free tubal reversal grants enterprise car rental deposit usaa subscriber savings account balance cnbc premarket future
Earned Income Credit
The Earned Income Credit (EIC) helps low income wage earners. The credit applies to higher income filers if a qualifying child lives in the household. IRS guidelines state that a foster child is a qualifying child but must meet the same standards as other children. The child must be under age 19 at the end of the year and must not be filing a joint tax return, unless she is filing just to get a tax refund. The foster child must live with you in the United States for more than half of the year. The highest qualifying income for EIC is $45,207 with one child and $53,930 with three or more children for married people filing joint returns.
While not a tax credit, the dependent exemption will generally reduce your tax liability. You are allowed to claim a foster child as a dependent if he meets certain tests. The rules for claiming a dependent can be complicated, but generally, if the child lived with you for over half of the year and you provided over half of his support, you can claim him as a dependent. Any foster care stipend that you receive for the child's care is considered support, so calculate support carefully and check with the IRS or a tax adviser if you are in doubt.
- boy behind parents image by Pavel Losevsky from