#AdoptionTalk: Taxes Revisited

Welcome to our second #AdoptionTalk Link Up!note to self

First things first, on the first Link Up, I promised to tell you Squirm’s adoption story this week. Well… you’ll have to come back next week for that.
(If you’d like, you can subscribe here to receive email updates whenever I publish a new post.)

This week, I want to revisit one of my most popular posts of all time – 

Can I Claim My Foster Child on My Tax Return?

You can find the original post at the link above. Some questions have come up several times since the post was published, so I thought I’d take a moment to address those. 

Full disclosure: Yes, I am a practicing CPA. Yes, I would be happy to do your taxes; our firm’s minimum fee is $450. No, I won’t do it for free. No, I won’t double-check the mistakes made by H&R Blech. And no, I won’t help your cousin Danny figure out to claim his cats. My goal is to help you understand the law, not how to get around it, but as with all internet advice, YMMV, please consult your tax preparer. 

Q: My agency/tax preparer/gardener says that in order to claim a foster child, I have to document all of my out-of-pocket expenses to prove that I provided more than half of the child’s support?
 A: Your, uh, person, is not up-to-date on qualifying child rules. Prior to 2005, in order to claim a child as a dependent, the taxpayer had to prove that they had paid more than half of the adorable little deductionschild’s support for the year. The Working Families Tax Relief Act of 2004, among other things, changed the definition of a qualifying child. Since 2005, in order to meet the Support Test, the child must not have provided more than half of their own support. And foster care board payments are considered support provided by the state, not the child, so they don’t affect whether you can claim your foster child as a dependent.

 

Q: I gave all this information to my agency, including your links to the IRS publications, and they still say that I can’t claim my foster child. Do you have any more authoritative opinions I can show them?
A: More authoritative than IRS Publications? No, not really. I mean, I linked the actual law in my previous questions, but if they don’t believe the IRS Publication linked in original post, I really don’t know what to tell you. And, honestly, unless it’s a matter of they won’t give you the social security number, you don’t really need their permission to properly file your tax return….

 

Q: My agency won’t give me the social security number for my foster child. Is there a way I can work around this? Can I apply for an Adoption Taxpayer Identification Number (ATIN)?

A1: I know that in NY, in particular, there is a real problem with getting the SSN from the agency. If you’ve shown them all the information about your right to claim your foster child as a dependent, and they still aren’t budging, here’s what you can try:

  • First of all, I recommend looking through all of your paperwork to see if they “accidentally” gave you the SSN somewhere.
  • I have heard anecdotally that some foster parents have been successful in taking their placement paperwork to the SSA office and requesting the number. This shouldn’t work. But several people have told me that it did. If you can’t find it anywhere in your paperwork, and can’t convince anyone to give it to you, you might try the SSA office.  
A2Here is the IRS’s FAQs about the ATIN. Basically, if you have paperwork stating that the placement is an adoptive placement, and your are eligible to claim the child as a dependent, you can use Form W-7A to request an ATIN. You will have to send a copy of the adoptive placement paperwork with the form. You cannot use an ATIN to claim the EITC. In the absence of documentation that the child was placed in your home for purposes of adoption by an authorized adoption agency (or agent), a foster child is not eligible to receive an ATIN.

 

Q: If I claim my foster child as a dependent, do I have to report the stipend/board payment as income?
A: Not unless you are considered a “professional foster parent” (you would know if you were and the agency would give you tax docs). The stipend is considered support provided by the state, basically child support, which is not taxable to the recipient.If anyone has told you that the stipend is taxable income, you need to consult a professional tax preparer (not H&R Blech). But whether or not you claim the child has no bearing on whether the stipend is considered taxable income.
Those are the most common questions that have come up since the original post, but you’ll still want to read Can I Claim My Foster Child on My Tax Return? for the priority info.
 Intaxification
Phew! I know that’s a ton of info to digest. Now onto what you really came for –

#AdoptionTalk Link Up

#AdoptionTalk Hosts

This week’s topic: Anything Goes!


Grab the #AdoptionTalk schedule here, so you’re ready for the whole year!

Next Link Up: February 19th

Next Topic: Ethics In Adoption

 

A few things to consider:
1) Be respectful of others. Adoption can be a sensitive subject, and opinions may differ from your own. Please be respectful to everyone.
2) Everyone is welcome. Adoptees, adoptive parents, birth parents, experts, foster care givers, those currently in the process. Anyone with a connection is welcome.
3) Try to read and comment on at least one other post. The point of a link up is to mingle and meet other bloggers. Have fun and check out a few of your fellow blogger’s posts.
4) Feel free to link an old post. We know you may have already blogged about some of the topics on our schedule. If you would like to link something you have already written that is just fine.
5) We would love an adoptee host. If you or anyone you know might be interested PLEASE let us know.
6) Follow Your Hosts. No need to follow everyone on everything, but make sure you follow in enough places that you’ll be reminded to link up.

Erin @ No Bohns About It | Facebook | Twitter | Instagram | Pinterest
Jamie @ Starfish Confidential | Facebook | Twitter | Instagram | Pinterest
Jenni @ Joyful Journey Mom | Facebook | Twitter | Pinterest
Jill @ Ripped Jeans & Bifocals | Facebook | Twitter | Instagram | Pinterest
Madeleine @ Our Journey to You Adoption Blog | Facebook | Twitter | Pinterest

7) Grab a button for your post or blog to help us spread the word so that other adoption bloggers can join in the fun.

Starfish Confidential #AdoptionTalk

And that’s it! We’re so excited that you are joining us!

4 Comments

  1. Shecki @ Greatly Blessed

    I’ve had some people say that when you adopt internationally, you can’t claim your child the first year unless they’re with you for more than 6 months. This does’t seem right to me, since I was told an adoption is treated like having a baby, and you can claim a newborn, even if they’re born in December. Which way is it?
    Shecki @ Greatly Blessed recently posted…Not Your Usual Attachment Talk – adoption linkupMy Profile

    Reply
    1. Jamie Nestrick (Post author)

      In the year a child is born or dies, you can claim the child if he/she lived with you more than half the time the child was alive (because they weren’t alive for the whole year).

      Other than the year the child was born (or dies), they must live with you more than half the year in order to be claimed as a dependent child.

      In fact, if the child is not a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico, they have to live with your FOR THE ENTIRE YEAR in order to be a qualifying child.

      Reply
  2. Jill

    Awesome info – thanks for sharing!
    Jill recently posted…What kind of Facebooker are YOU?My Profile

    Reply
  3. Pingback: The Foster Mom's Guide to Central Florida | The Foster Mom's Guide to Taxes for Foster & Adoptive Parents

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