***Disclaimer- I am in no way an expert in finances or tax law. No portion of this blog should be taken as legal advice. Please contact a tax professional and your agency before making your own tax decisions.***
The IRS allows Foster Parents to claim children who have been placed in their home by an authorized agency and have stayed 6 months or longer for the year. There is something about the child providing 50% of their expenses, and maybe the Foster Care stipend counts towards that or maybe it doesn't- depending on who you ask. If the baby was born after June, but placed directly with you and lived with no one else for the rest of the year, you may or may not be able to claim that child as a dependent.
Obviously this is more of an anecdotal post than informational.
In the MAPP training class we took 3yrs ago, we were told that we could claim kids in care after they had been in our home for 6 months. The MAPP class I co-lead in 2011 was told that kids in care can NOT be claimed as dependents on the foster parents' income tax. I'm not super sure what happened between those years, but I choose to follow what I was told when being certified.
Baby 1 came in August of 2009, so taxes were not an issue at all that year- we couldn't claim him.
Baby 2 lived with his Mother for 2.5 months in 2010, and with me for the remaining 9.5 months. He never spent a night with his Dad. Baby 3 only lived with me for the 10months he was alive in 2010. They never even had an overnight visit during that time. Their caseworker offered me their Social Security numbers in January 2011 so I could claim them as dependents on our 2010 taxes.
We have always used Turbo Tax for our taxes, and we have had good results so far. I put in the information for Baby 2 with no problems and I watched the little ticker at the top of our computer screen go up as our tax return increased. Then I entered Baby 3's info and got a large pop-up- "The Social Security number you entered has already been used for an Earned Income Credit. Make sure the number is correct and no one else can claim the dependent." I checked the number and it was right. I contacted the help line and they informed me that I am legally entitled to dispute the use of 3's social security number by anyone else. I would just need a letter from our agency stating the dates that he was placed with me. The IRS would then investigate both us and the other person who claimed him and make their decision.
Since I was clearly in the right, and the caseworker offered to write that letter for us, I could have filed our taxes by mail with the letter included and waited for an audit. The problem was that I knew by then that the boys were going home. I also knew it was the Dad who claimed Baby 3 fraudulently. I was afraid that pursuing this would cause financial strain in the home where my children would be living, and would kill any possibility for us to see them after they left. So I just claimed Baby 2 and said nothing to Dad about it. It was hard to keep my mouth shut when he told us (after the boys went home) that he bought an Xbox with his tax return. Ugh!
This year is different, though. Baby 4 is with me still. I don't feel the need to play nice with any of the adults in his situation when it comes to money. So I was prepared to be audited and make some people mad when I asked 4's caseworker for his Social security number while preparing to do our taxes. I wasn't prepared for her response, though: "I believe in regards to the claiming foster kids on taxes, we are not a part of that and we are not allowed to provide social security numbers. You could ask your homefinder to see if there is something different then what I believe it is." What?!
So I did exactly what she suggested. My homefinder checked with several other people and called me back to let me know that the caseworker can release his social security number to me, but the county would in no way help me in the case of an audit. They will not write a letter on our behalf, and they will not defend us to upset bios if it comes to that. Whatever, I can prove he was with me without them- good thing I keep all my paperwork. I got the social security number from the caseworker then Baby 5 was sent home, Baby 4 had his birthday and surgery, and taxes got put on the back burner.
The night that baby 4 stayed in the hospital after surgery, Relative Resource called my phone to talk to him. Baby 4's Dad was there too, and talked to RR in front of me. I have no idea what she was saying, but this is what I heard from Dad:
"That's good, That's good. Yeah, I would go to Jackson Hewitt- They're good."
"You don't have any kids"
"I don't know it like that."
"I don't have his card. You have his card."
"I'm not asking her that. She's going to say no anyway."
"Just go to Jackson Hewitt in the morning. They'll tell you."
Like I said, I have no idea what RR was saying, but it sounded to me like I was about to experience a repeat of last year. So I had Brandon bring down all our stuff and I did our taxes right in the hospital that night.
Our return came back just fine, so I guess we're not being audited (yet).
Baby 5 did not live with us for 6mo in one year, and Baby 6 was only with us a couple of weeks so taxes next year should be less exciting since I already have Baby 4's social security number.
Who would have thought that foster care could bring such drama into something as boring as taxes?