Foster care and how it relates to your tax picture

Foster care questions regarding taxes may emerge during process


My husband and I are becoming certified to foster children in our home. Will the payments from the foster agency be taxable?


outstanding tax bill

Laura Hackney, CPA

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.