Can I Claim My Child on Taxes if They Are in Foster Care?

Claiming a child on your tax return can result in tax benefits, including credits and a more favorable filing status. These benefits are governed by Internal Revenue Service (IRS) rules that define who qualifies as a dependent. For a biological parent whose child is in foster care, the ability to claim the child depends on applying these rules to the family’s circumstances.

The Four Tests to Claim a Qualifying Child

To claim a child as a dependent, the IRS requires the child to be your “Qualifying Child,” which is determined by meeting four distinct tests. Failing even one of these tests means you cannot claim the child for most tax purposes.

• Relationship Test: The child must be your son, daughter, stepchild, or an eligible foster child. This category also extends to your brother, sister, half-sibling, or a descendant of any of these individuals. An adopted child is always treated as your own child for tax purposes.
• Age Test: The child must be under age 19 at the end of the tax year, or under age 24 if they were a full-time student for at least five months of the year. In either case, the child must be younger than you. An exception exists for individuals who are permanently and totally disabled, who can meet the test at any age.
• Residency Test: The child must have lived with you for more than half of the year, meaning more than 183 nights. The IRS allows for temporary absences for reasons like school, vacation, or medical care.
• Support Test: The child cannot have provided more than half of their own support during the tax year. This means the child did not pay for most of their own living expenses, such as housing, food, and clothing.

Applying the Dependency Tests to a Foster Care Situation

For a biological parent, the ability to claim a child who is in foster care almost always hinges on the Residency and Support tests. While the parent still meets the Relationship Test and likely the Age Test, the circumstances of a foster care placement directly conflict with the requirements of the other two tests.

The primary hurdle is the Residency Test. A child’s court-ordered placement into a foster home is not considered a “temporary absence” by the IRS. Because the child did not live in the biological parent’s home for more than half of the year, the parent fails the Residency Test, which is enough to disqualify the parent from claiming the child.

The Support Test presents another obstacle. Payments made by a state or a placement agency for a child’s foster care are considered support provided by a third party, not by the biological parent. These payments are almost always the primary source of the child’s financial support for the year, causing them to fail the Support Test as well.

Because a biological parent of a child in foster care for more than half the year fails both the Residency and Support tests, they cannot legally claim the child as a dependent. The legal and physical reality of the foster care placement supersedes the biological relationship for tax dependency purposes.

Potential Claims by Foster Parents

When a biological parent cannot claim a child due to a foster care placement, the foster parent may be eligible to do so. An individual can claim a foster child as a Qualifying Child if the child was placed in their home by an authorized placement agency or by a court order. This placement satisfies the Relationship Test from the foster parent’s perspective.

For a foster parent to claim the child, they must also meet the other three tests. The Residency Test is met if the child lived with the foster parent for more than half of the tax year. The Support Test requires that the child did not provide more than half of their own support; foster care payments from an agency are considered support from a third party, not from the child.

In situations where a child lives with different people during the year, the IRS has “tie-breaker” rules to determine who can claim the child. These rules prioritize the person with whom the child lived for the longest period. If a child lived with a foster parent for more than half the year, the foster parent would have the stronger claim over a biological parent with whom the child lived for a shorter time.

The tax benefits associated with the child follow the person who provided the primary residence and support.