Foster Care

What is the name of your state? Ohio
We are in the process of becoming Therapeutic Foster Parents and found out that the county or an agency reimburses us on a per diem basis for each child cared for in our home. Is this reimbursement subject to federal and state income taxes? Can these foster children be claimed as dependents when we file our annual income tax return?

cajlpoole said:

What is the name of your state? Ohio
We are in the process of becoming Therapeutic Foster Parents and found out that the county or an agency reimburses us on a per diem basis for each child cared for in our home. Is this reimbursement subject to federal and state income taxes? Can these foster children be claimed as dependents when we file our annual income tax return?

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Generally foster care payments are not included in income, however additional payments for "difficulty of care" can be taxable.

Foster children can be claimed as dependents as long as they meet the normal criteria for qualifying children. For example, a foster child who only lived with you for three months of the year is not going to meet the requirements to be a qualifying child.

Use a tax professional with experience in that area.