2022 Tax Season
Foster Care and Taxes. It’s tax time for 2022. This can be a confusing time for foster parents. Did you know you can claim your foster children on your tax return in South Carolina and receive Tax Credits? We will discuss the IRS requirements for claiming a child on your taxes in this post and what happens if a biological parent or someone else claims them. https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/qualifying-child-rules
Note: I am not a lawyer or accountant. This article is not legal advice and is only intended to provide general guidance. For any specific questions about your tax return, please get in touch with a licensed attorney or certified tax expert.
IRS Requirements
Who can claim a child on their taxes? What are the requirements to claim the child on your taxes? The following are IRS Requirements on who is allowed to claim a child. If the child does not fit the criteria, you can not claim them.
Age:
- Any age and permanently disabled at any time during the year;
- Under age 19 at the end of the year;
- Under age 24 at the end of the year and a full-time student for at least five months of the year
Relationship
For the EITC, you can only claim a foster child that is placed with you by:
- A State or local government agency
- An Indian tribal government
- A tax-exempt organization licensed by a state or an Indian tribal government
- A court order
Residency
For the EITC, you can only claim a foster child that has been placed with you for:
- More than half the tax year. It equates to 183 days (about 6 months+1 days). It does not have to be consecutive. If a child reunifies with their family and returns to your home, they are still eligible for the EITC. The same is true if they are incarcerated, run away from home, or end up in the hospital for an extended period.
- In the case of infants, they must have lived with you for more than half their lives. For example, a child who is eight months old has to have lived with you for at least four months. If they lived with more than one person, you could not claim them.
What happens if someone else claims the child?
Your tax return is about to be filed. This child has been with you for at least six months and one day (183 days), and a qualifying agency placed them with you. You will need to gather the correct name and spelling, the date of birth, and the social security number. You receive an error message when you try to file online with the IRS. Another individual has claimed this child. You do not know who this individual is, only that they have been claimed. The child’s social security number could have been stolen, or the biological family could have claimed the child on their return when they shouldn’t have. This is a prevalent scenario. Unfortunately, it can be a long, drawn-out, aggravating process.
Steps to take in order to file a correct return
E-file
In this case, you’ll probably need to remove that child and e-file your return. You may need to adjust your return to single instead of head of household. In a reasonable amount of time, you can get any money you’re owed back (other than the EITC or Child Tax Credit).
Amended return
- Prepare paper amended tax return.
- Claim your dependent(s).
- Mail the completed tax return to the IRS.
- Attach the foster care agreement proving you can claim the child
- Note: It can take 6-8 weeks for tax returns to be processed. This is why it is recommended for you to file electronically without the child in question on the return in order to get any other money that you are owed. Want more information about fostering? Here’s a great blog post. https://bridgetoindependence24.com/becoming-a-foster-parent-in-south-carolina-what-questions-to-expect-in-your-home-study/
What happens next?
In my experience, the person who claimed the child gets away with it, but the IRS may ask for a refund. You should consider if you ever adopt the child to change their social security number due to identity theft. Having this child for a long time, may happen every year. Here is Social Security’s website for further information on how to change a child’s number. https://faq.ssa.gov/en-us/Topic/article/KA-02220
