Eligibility for child tax credit.

[wth11]

My wife and I had a nephew and nieces placed in foster care with us in July 2024, and they lived with us for the rest of 2024.  They had been living with an unrelated foster parent for all of 2023 and 2024 until they were placed with us.  They are US citizens with SSN's and meet all of the other requirements to be a qualifying child.  By the IRS instructions, it appears that they are "qualifying children" for us based on the foster care placement this year, but they also are qualifying children for the former foster family since they were with that family for more than half of 2024.  

Is there any problem with us trying to claim the child tax credit for them, especially if the former foster family also tries to claim a tax credit for them?  For the tie breaking rules, there is no way for us to determine if we or the other foster family has the higher AGI.

[KrisD15]

There should not be a problem with you claiming the children as your dependents. 

Since the children were placed with you in 2024, they are considered as living with you for more than half the year.

You could mention your concern with the case worker, but you'll know once you go to e-file, since if the children were already claimed the IRS will reject your return. 

If that happens, you will need to decide if you want to keep the children listed as dependents and mail the return or remove the dependents and e-file. 

I would assume that the temporary foster care provider is aware that you will be claiming the children since they are related to you and were placed in your home. 

[wth11]

I was planning on filing on paper.  I'm assuming that in the event our claim of the credit is denied and is given to the other family, this is a situation the IRS would NOT consider to be a reckless disregard of the requirements and the only downside would be having to file form 8862 with our 2025 return.

[Vanessa A]

That is correct. It would not be considered reckless disregard, however, since the other family did have them with them for more than 6 months they may try to claim them.  

You may want to consider e-file instead of paper file, this will let you know right away if your return will be rejected and if the children are already claimed or not.  This would at least tell you if you want to go down that road or not.

If the other family does claim them and would win, the IRS would simply adjust your refund and remove any credits related to the kids for 2024.  This may delay processing of your return.  However, as you pointed out, it would not be considered reckless disregard as long as you do have the right to claim them.