Q. Do they count as dependents for anyone or does nobody claim them?
A. Simple answer: nobody can claim them.
But taxes aren't simple. You may be able to claim them. For taxes purposes, a legally placed foster child is the same as a biologically or adopted child. So, you meet the relationship test.
There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit and student status test, a relationship test and a residence test. Only a QC qualifies a taxpayer for the Earned Income Credit and the Child Tax Credit.
As others have said, the children cannot be your QC because they did not live with you for more than half the year. So, next we look to see if they qualify as qualifying relatives.
A person can still be a Qualifying relative dependent, if not a Qualifying Child, if he meets the 6 tests for claiming a dependent:
- Closely Related (Foster child counts) OR live with the taxpayer all year
- His/her gross taxable income for the year must be less than $4300 (2020).
- The taxpayer must have provided more than 1/2 his support for the year
In either case:
- He must be a US citizen or resident of the US, Canada or Mexico
- He must not file a joint return with his spouse or be claiming a dependent of his own
- He must not be the qualifying child of another taxpayer (he isn't because he did not live with any other relative for more than half the year)
So, it comes down to the support test. If the amount of support your provided in the 5+ months you had them was more than the support provided by others, including payments by government agencies, you can claim them as a standard (not QC) dependent. Admittedly, it will be hard to come up with numbers for the first half+ of the year.
The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf The support value of a home is the fair market rental value, divided by the number of occupants. Admittedly, it will be hard to come up with numbers for the first half+ of the year.
The Other dependent (qualifying relative) credit is worth (up to) $500 per dependent and is non-refundable. That is, it can only be used to reduce an actual tax liability. No Child tax credit, no EIC.
