Can we claim a foster child as dependent? We do not get paid. Placed w/us 7/6/20, still with us. If he's here <1 calendar yr, what is the cutoff date for claiming him?

[jaimiers]

He may go back home in the next couple of months, so this applies to both last year (2020) and this year (2021). We are a family friend, not licensed foster care. We provide food, housing, etc. Everything except medical (which is through the state). I'm wondering if we can claim him as dependent for either year.

[DMarkM1]

It depends. Since he was "placed" with you on 7/6/2020 he would not meet the rule number 3 (below) for 2020 as a qualifying child. To be a foster child he must have been placed by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

However, if he was placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction, then he could meet the qualifications for an "other dependent" (see below for other qualifying dependent) for 2020. 

You should add the dependent to your return and answer the questions in TurboTax and the program will let you know if you can claim or not.

For 2021 again if he was placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction and stays with you for 6 months and 1 day in 2021, then he would be a qualifying child. If less than 1/2 the year then he would still be an "Other qualifying dependent".   

If he was not placed by an authorized placement agency, then he needs to live with you all year to qualify as an "other dependent".

Qualifying child:

1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

2. The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or (c) any age if permanently and totally disabled.

3. The child must have lived with you for more than half of the year.

4. The child must not have provided more than half of his or her own support for the year.

5. The child must not be filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).

Other Qualifying dependent:

1. The person can't be your qualifying child or the qualifying child of any other taxpayer.

2. The person either (a) must be related to you in one of the ways listed under Relatives who don't have to live with you , or (b) must live with you all year as a member of your household (and your relationship must not violate local law).

3. The person's gross income for the year must be less than $4,300.

4. You must provide more than half of the person's total support for the year.

[jaimiers]

That's what I thought, re:2020, that it was just under half the year. If he stays with us through July 2nd 2021, that would be the tipping point, I think, for 2021.  He was placed with us through the Department of Child and Family Services, we have a letter stating such as of 7/6/2020. He is officially in the foster system, we just aren't foster parents, something more akin to a family placement. I think we should qualify if he's here past that tipping point date this year since we are paying for all of his care with the exception of medical.  I tried to amend my 2020 return to answer the relevant questions through Turbo Tax but it says my return isn't eligible for an amendment at this time.

Thank you so much for your helpful reply!

[Opus 17]

You don’t have to be a “licensed” care facility, but the child must have been placed in your home by a qualified state agency or court order.  If this is true, then the following rules apply:

1. If the child is a newborn and lived in your home more than half the nights of the year since it was born, you can indicate they lived with you all year and were your foster child and you can claim them as a “qualifying child” dependent.

2. If the child is not a newborn, then you cannot claim them as a “qualifying child“ dependent because they did not live with you more than half the nights of the year. You can claim them as a “qualifying relative“ dependent, sometimes called an “other dependent“ if you paid more than half their total financial support for the year. If you paid less than half the total financial support, the only way you could claim them as a dependent is if you got a signed agreement from everyone who paid at least 10% of the child support, specifying that they will not claim the child and that you may claim the child.

For 2021, if the child remains in your home at least half the nights of the year, you can claim them as a qualifying child dependent.

However, if the child was not placed in your home by an authorized agency or court order, then you cannot claim the child as a foster child. You would list them in TurboTax as “someone else“ not related to you and not your foster child. This will only allow you to claim them as a qualifying relative or other dependent.  For 2020, you can’t claim them as a dependent because they did not live in your home the entire year. (If the child is a newborn, you could only claim them as a dependent if they lived in your home for the entire remainder of year after coming home from the hospital.) For 2021, you can only claim them as a dependent if they live as a member of your household for the entire year, and you provide more than 50% of the total support. If support provided by the state is more than support provided by you, you would not be able to claim them as a dependent.