topic Foster kid in Deductions & credits

Foster kid

ellistonj — Mon, 22 Feb 2021 22:25:42 GMT

Foster child place by state.

Born end of May 2020

Placed with us Jun 2020

Moved to new placement (extended family) Oct 2020

Lived:

-Parents: 1 Month

-Us: 5 Months

-Extended Family: 2 Months

Who can claim the foster child?

Re: Foster kid

MinhT1 — Mon, 22 Feb 2021 22:44:47 GMT

According to the IRS rules, the child must live with the taxpayer for more than 6 months of the year in the US to be claimed as a dependent.

In this case, nobody can claim the child as a dependent.

Re: Foster kid

ellistonj — Tue, 23 Feb 2021 01:40:33 GMT

I understand the 6 month, however, I also found this:

Source: https://www.irs.gov/publications/p17#en_US_2020_publink10008407

Note the "exceptions" section posted in Red. It would seem to me this indicates that 5 months in one home for an 8 month old (at the end of the year) qualifies the child for the residency portion of the CTC.

Am I reading the IRS site wrong?

<<<<<<<<<<< From the above site >>>>>>>>>>>>>>

Child Tax Credit (CTC)

The CTC is for individuals who claim a child as a dependent if the child meets additional conditions (described later).

Note.

This credit is different from and in addition to the credit for child and dependent care expenses and the earned income credit that you may also be eligible to claim.

The maximum amount you can claim for the credit is $2,000 for each child who qualifies you for the CTC. But, see Limits on the CTC and ODC , later.

For more information about claiming the CTC, see Claiming the CTC and ODC , later.

Qualifying Child for the CTC

A child qualifies you for the CTC if the child meets all of the following conditions.

The child is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew).
The child was under age 17 at the end of 2020.
The child didn’t provide over half of his or her own support for 2020.
The child lived with you for more than half of 2020 (see Exceptions to time lived with you , later).
The child is claimed as a dependent on your return. See chapter 3 for more information about claiming someone as a dependent.
The child doesn’t file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid).
The child was a U.S. citizen, U.S. national, or U.S. resident alien. For more information, see Pub. 519, U.S. Tax Guide for Aliens. If the child was adopted, see Adopted child , later.

Example.

Your son turned 17 on December 30, 2020. He is a citizen of the United States and you claimed him as a dependent on your return. You can't use him to claim the CTC because he was not under age 17 at the end of 2020.

If your child is age 17 or older at the end of 2020, see Credit for Other Dependents (ODC), later..

Adopted child.

An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

If you are a U.S. citizen or U.S. national and your adopted child lived with you all year as a member of your household in 2020, that child meets condition (7), earlier, to be a qualifying child for the child tax credit (or condition (3), later, to be a qualifying person for the ODC).

Exceptions to time lived with you.

A child is considered to have lived with you for more than half of 2020 if the child was born or died in 2020 and your home was this child's home for more than half the time he or she was alive. Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you.

There are also exceptions for kidnapped children and children of divorced or separated parents. For details, see Residency Test in chapter 3.

Re: Foster kid

macuser_22 — Tue, 23 Feb 2021 01:46:06 GMT

@ellistonj wrote:

I understand the 6 month, however, I also found this:

Source: https://www.irs.gov/publications/p17#en_US_2020_publink10008407

Note the "exceptions" section posted in Red. It would seem to me this indicates that 5 months in one home for an 8 month old (at the end of the year) qualifies the child for the residency portion of the CTC.

That is true for a child born in 2020. A child born anytime in 2020 (even Dec 31) is deemed to have lived with you the entire year. In the case of a new born that lived in two homes. it is the one that they lived in the longest after birth.

Re: Foster kid

ellistonj — Tue, 23 Feb 2021 01:51:33 GMT

Thanks. Looks like TurboTax does not handle this situation correctly. The program will only allow the child to be counted if the number of months is greater than 6 when the conditions are a little more complex than a simple 6 month residency.

Re: Foster kid

macuser_22 — Tue, 23 Feb 2021 02:57:32 GMT

@ellistonj wrote:

Thanks. Looks like TurboTax does not handle this situation correctly. The program will only allow the child to be counted if the number of months is greater than 6 when the conditions are a little more complex than a simple 6 month residency.

In the dependent interview you select the "Whole year". TurboTax help even tells you that.

Re: Foster kid

ellistonj — Tue, 23 Feb 2021 18:47:31 GMT

In this case the child was NOT in our home the entire year after birth but was in our home more than any other home AND was in our home for over half the child's life.

The logic for TurboTax to figure it out is easy but is missing. TurboTax is all about not having to know the difficult IRS rules but it is missing the logic to figure this out properly.