How Much Do You Get Paid for Fostering a Child?

Fostering a child represents a significant commitment to providing a safe and nurturing environment for children in need. Financial support provided to foster parents is not a salary for their efforts but rather a reimbursement to cover the costs associated with caring for the foster child. These payments help ensure that foster parents can meet the child’s daily needs without incurring undue financial burden. This article aims to explain how these reimbursements function, the factors that influence their amounts, and other financial assistance available to foster families.

The Basics of Foster Care Reimbursement

Foster care reimbursement, often called a stipend or per diem, offsets expenses directly related to a foster child’s care. These funds cover essential needs such as food, clothing, shelter, transportation, and incidentals. Their primary purpose is to ensure the child’s well-being and prevent foster parents from facing financial hardship.

Reimbursement amounts vary significantly across the United States, typically ranging from $400 to over $1,000 per child per month. Daily rates might range from $20 to over $40, depending on various factors. Payments are generally disbursed monthly directly from the state agency or a qualified foster care placement agency.

These funds are specifically for the foster child’s needs and are not considered personal income for the foster parent. The intent behind these stipends is to facilitate the provision of care, not to serve as a profit-generating activity. Foster parents are expected to utilize these funds for the child’s benefit.

Factors Determining Reimbursement Amounts

The specific reimbursement amount a foster parent receives is influenced by several key factors, leading to considerable variability. State and local regulations play a primary role, as rates differ significantly by state, county, and the specific agencies involved in placing children. There is no federal minimum rate; states establish their own methodologies for determining adequate rates.

A child’s age is another common determinant, with older children often qualifying for higher reimbursement rates. For example, some states provide a higher daily rate for children aged 12 and older. This adjustment reflects the increased costs associated with older children, such as clothing, personal care items, and activities.

Children with special needs, including those with medical conditions, behavioral challenges, or disabilities, typically qualify for higher “difficulty of care” rates. These increased payments compensate foster parents for the additional resources, specialized care, and time required to meet these children’s unique needs. A state must determine the need for this additional compensation, and the payments must be designated for this purpose.

The licensing level or type of care provided by the foster parent can affect reimbursement rates. Some agencies or states have different licensing tiers, such as basic foster care versus therapeutic foster care, with higher rates corresponding to the increased level of specialized care or training required. While the total reimbursement increases with the number of children placed in a home, the per-child rate generally remains consistent unless additional needs are identified.

Additional Financial Assistance

Beyond regular per diem reimbursement, foster parents may access other financial assistance to support the child’s comprehensive well-being. Medical and dental care for foster children is typically covered through Medicaid or other state-funded health insurance programs. Healthcare expenses are generally handled separately and are not expected to be paid out of the basic daily stipend.

Many programs provide periodic or annual clothing allowances, which vary by age. Older children often receive higher amounts due to increased clothing costs. Support for child care costs may also be available, particularly if the foster parent works, helping to alleviate the financial burden of professional childcare services.

Respite care, providing temporary care for the foster child, may be covered. Assistance for school-related expenses, such as supplies, fees, or extracurricular activities, can also be provided. For children with specific needs, funding for specialized equipment, therapy, or tailored services might be available.

Tax Considerations for Foster Parents

Foster care payments are generally treated favorably under federal tax law. Amounts received by a foster care provider as “qualified foster care payments” are typically excluded from gross income under Internal Revenue Code Section 131. This exclusion applies to both basic foster care payments and “difficulty of care payments” that compensate for additional care needed by a foster individual.

Foster care reimbursements are generally not considered taxable income and do not need to be reported on a tax return. However, limitations exist: difficulty of care payments are not excludable if they are for more than 10 qualified foster individuals under age 19 or more than five qualified foster individuals aged 19 or older. The IRS clarifies that the exclusion applies to payments for the provision of foster care, not necessarily requiring detailed records of actual expenses to match the reimbursement amount.

Foster parents may also claim the foster child as a qualifying child for certain tax credits, such as the Earned Income Tax Credit or the Child Tax Credit, if specific dependency tests are met. These tests typically include criteria related to age, relationship, residency, and support. Foster parents should maintain accurate records of all payments and expenses, even if income is tax-exempt, for proper financial oversight. Given tax law complexities, consulting a qualified tax professional is advisable for personalized guidance.