Are my foster children dependents?

[mrunge340]

We've had our foster kids from July 29 through the end of the year (5 months, 3 days). The most they lived anywhere else in 2020 was 3 months and a few days (bio mom). Do they count as dependents for anyone or does nobody claim them? Thanks 

[Bsch4477]

Since you are not the kids’ parent and they didn’t live with you all year you can’t claim them as dependents. 

[DianeW777]

No, you do not meet the residency test. To claim Foster children as a dependents they must be placed in your care by a placement agency, court order, or any government agency.

Five tests must be met for a child to be your qualifying child. The five tests are:

1. Relationship
2. Age
3. Residency
4. Support
5. Joint return

In your case as long as you were ordered by a government agency to care for the child(ren) you have passed the Relationship test,

The Age requirements are as follows:

• Under age 19 at the end of the year and younger than you (or your spouse, if filing jointly),
• A student under age 24 at the end of the year and younger than you (or your spouse, if filing jointly), or
• Permanently and totally disabled at any time during the year, regardless of age.

The Residency requirement is not met because the child was not placed under your care and financial support for more than half of the year.

To meet the Support test the child cannot provide more than half of her support for the period in question.

The IRS Rules for Dependents are very detailed. To view the rules and tests for dependency please click here.

Here you will be able to view in detail every specific aspect which may apply to you.

[Hal_Al · Accepted solution]

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:

1. Closely Related (Foster child counts) OR live with the taxpayer all year
2. His/her gross taxable income for the year must be less than $4300 (2020).
3. The taxpayer must have provided more than 1/2 his support for the year

In either case:

4. He must be a US citizen or resident of the US, Canada or Mexico
5. He must not file a joint return with his spouse or be claiming a dependent of his own
6. 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.

[Opus 17]

---

@Bsch4477 wrote:

Since you are not the kids’ parent and they didn’t live with you all year you can’t claim them as dependents. 

---

Foster parents have the same legal status as biological parents, as long as the foster placement was by the state or an agency licensed by the state ("unofficial" placements don't count). 

However the residency rules still apply. 

[Opus 17]

---

@Hal_Al wrote:

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.

---

If you did not provide more than half their total support, you can still claim them as "qualifying relative" dependents if you get a signed multiple support agreement letter from everyone who provided more than 10% of their support, agreeing that you can claim them.

This, of course, might be a big problem.  But it might also be an opportunity for negotiation.  You say "kids" (more than one).  The biological mom also can't claim them as dependents because they did not live with her more than half the year.  But if you were to offer to sign a multiple support agreement allowing you to claim child #1 and mom to claim child #2, then you both get something, instead of both getting nothing.