28 Aug Foster care and how it relates to your tax picture
Foster care questions regarding taxes may emerge during the process
My husband and I are becoming certified to foster children in our home. Will the payments from the foster agency be taxable?
Foster care has many criteria in Tennessee. To become a foster parent, there are several steps along the way. In the same way, there are many tax questions that may be top of mind once becoming a foster parent as well.
Payments received for providing foster care in your home generally are not included in income. Payments that can be excluded from income include amounts received from a state or local government or from a qualified foster care placement agency.
There are some stipulations based on the type of payments received and the age of the foster placement. Additionally, you may even be eligible for a charitable deduction for unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child if the foster activity is not undertaken with a profit motive and a qualified organization designates the foster children you take into your home.
As in most cases, it is always recommended to consult a tax professional to determine how these rules apply to your specific circumstances. At Dempsey Vantrease & Follis, out team of tax experts can assist in matters such as this and with any other questions that may emerge.