Author credentials
I’m a CPA and CFP® with more than 15 years advising families, including foster parents, on tax and household planning. This article explains the IRS rules you’ll use to determine whether you can claim a foster child as a dependent and how to document the claim — educational guidance, not individualized legal or tax advice. Consult a tax professional for decisions specific to your situation.
Why this matters
Claiming a foster child can change your tax outcomes: it may make the child a qualifying child for the Child Tax Credit, the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit, and for filing-status considerations. These credits often translate to lower tax bills or a larger refund and can materially help households covering foster care costs.
Key IRS rules at a glance
- Relationship: The IRS treats a child placed with you by an authorized placement agency (or by a court) as your child for dependent tests (IRS Publication 501).
- Residency: The child must live with you for more than half the tax year, with limited exceptions for temporary absences.
- Age: To be a qualifying child for the Child Tax Credit and many other benefits, the child must be under age 17 at year end for the Child Tax Credit; other benefits (EITC, dependent status generally) use under 19 — or under 24 if a full-time student; a permanently and totally disabled child may be any age.
- Support: You generally must provide more than half of the child’s financial support for the calendar year.
- Citizenship: The child must be a U.S. citizen, U.S. national, or resident alien.
- Joint return: The child can’t file a joint return with a spouse unless the joint return was only to claim a refund of withheld tax.
(See IRS Publication 501 for complete dependency rules: https://www.irs.gov/publications/p501.)
Step-by-step: Can you claim a specific foster child?
1) Confirm placement source and paperwork
If the child was placed in your home by a state or local social service agency, a court, or an authorized placement agency, that placement generally satisfies the IRS “relationship” test for foster children. Keep agency placement forms or court orders showing the placement date and the placing authority.
2) Check residency for the year
Count days the child lived in your home. Temporary absences (school, hospital, short-term visits) usually count as time lived with you. If the child was placed mid-year but still lived with you for more than half the year, they may qualify.
3) Verify age and student status
For the Child Tax Credit (CTC), the child must be under age 17 at the end of the tax year. For many other dependent-related benefits (like EITC), the qualifying child age test is under 19 or under 24 if a full‑time student (or any age if permanently and totally disabled).
4) Analyze support
You must typically have provided more than half of the child’s support for the year. Support includes housing, food, clothing, education, medical care not covered by insurance, and other living expenses. Note that certain foster-care payments are not taxable to you and may not count as support from the foster parent; check IRS Publication 525 for rules about foster-care payments (https://www.irs.gov/publications/p525).
5) Confirm no one else claims the child
If another person (for example, the child’s biological parent) can claim the foster child under IRS tests, you cannot claim the child too. If more than one person tries to claim the same child, the IRS applies tiebreaker rules, such as who the child lived with the longest during the year and the parents’ filing status (Publication 501).
Which tax benefits can a qualifying foster child unlock?
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Child Tax Credit (CTC): If the child meets the CTC age and other qualifying-child tests, you may claim the credit. The IRS has current details and thresholds on the CTC page (https://www.irs.gov/credits-deductions/child-tax-credit).
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Earned Income Tax Credit (EITC): A qualifying foster child can increase the EITC if you meet income and other EITC rules (https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit-eitc).
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Child and Dependent Care Credit: If you paid qualifying care expenses so you could work or look for work and the child is under 13 (or disabled), this may apply.
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Filing status: A qualifying child may permit the taxpayer to use head-of-household filing status, which typically results in a lower tax rate and larger standard deduction than filing single.
Documentation checklist (what I recommend you keep all year)
- Placement agreement or court order showing placement date and placing agency/court (essential).
- Daily or monthly records showing the child’s residence and absences (school records, camp dates, hospitalization paperwork).
- Financial records of support: receipts, bank statements for food, clothing, medical bills you paid, rent or mortgage portion attributable to the child, and education expenses.
- Records of foster-care payments: statements from the agency showing payments received and whether they were designated as reimbursement or non-taxable qualified foster-care payments.
- Proof of citizenship/residency status if available (birth certificate, social security number if issued).
Common real-world scenarios and how they play out
Example 1 — Full-year placement
Maria hosted a foster child placed by the county on Jan. 5 and cared for the child the entire year. Maria provided more than half the child’s support and the child was under 17. Maria could claim the child as a dependent, use Head of Household (if otherwise eligible), and claim the Child Tax Credit and EITC as applicable.
Example 2 — Mid-year placement
A foster child arrived on July 1 and remained through year-end. Because the child did not live with the foster parent for more than half the year, the foster parent could not claim the child under the residency test unless an exception applied (for example, temporary absences or different year-counting in certain circumstances). You must carefully count days and review placement notes.
Example 3 — Agency payments and support
If a foster parent receives monthly payments from a government agency that are marked as qualified foster-care payments, those payments may not be taxable to the foster parent and might not count as the foster parent’s support. That can affect the “provided more than half support” test. Consult IRS Publication 525 and your tax adviser (https://www.irs.gov/publications/p525).
Frequently asked questions (practical answers)
Q: Can I claim a foster child if I don’t have legal custody or adoption proceedings?
A: Yes. For federal tax purposes, a child placed in your home by an authorized placement agency or court is treated as your child for dependency tests even if you do not have legal guardianship or adoption. Keep placing agency documentation (IRS Pub. 501).
Q: If the child is placed with me by a biological parent without agency placement, can I claim them?
A: No. A foster child must typically be placed by an authorized agency or court to meet the IRS “relationship” test; a placement by a biological parent usually does not create the same status.
Q: What if someone else claims the child incorrectly?
A: If the IRS receives more than one return claiming the same dependent, it applies tiebreaker rules. You may need to provide documentation showing the child lived with you and that you provided more than half of the support. See our guide on resolving dependent disputes: “When a Child Becomes a Tax Dependent: Age, Income, and Support Rules” and “How to Claim a Person as a Dependent: Practical Checklist.” (Internal links below.)
Common mistakes to avoid
- Not keeping placement paperwork. Without it, your claim is weak if the IRS questions your return.
- Forgetting to track temporary absences. School or medical absences usually count as time living with you; vacation or long visits may not.
- Assuming agency payments always count as your support. Check whether the payments are taxable or classified as reimbursements — this affects the support test.
Internal resources (related FinHelp guides)
- When a Child Becomes a Tax Dependent: Age, Income, and Support Rules — https://finhelp.io/glossary/when-a-child-becomes-a-tax-dependent-age-income-and-support-rules/
- How to Claim a Person as a Dependent: Practical Checklist — https://finhelp.io/glossary/how-to-claim-a-person-as-a-dependent-practical-checklist/
- When You Must Amend a Return Because of a Dependent Error — https://finhelp.io/glossary/when-you-must-amend-a-return-because-of-a-dependent-error/
Authoritative external sources
- IRS Publication 501, Dependents, Standard Deduction, and Filing Information: https://www.irs.gov/publications/p501
- IRS — Child Tax Credit: https://www.irs.gov/credits-deductions/child-tax-credit
- IRS — Earned Income Tax Credit (EITC): https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit-eitc
- IRS Publication 525 (Taxable and Nontaxable Income) for guidance on foster-care payments: https://www.irs.gov/publications/p525
- Child Welfare Information Gateway — Financial incentives for foster parents: https://www.childwelfare.gov/topics/foster-care/foster-parent/financial-incentives/
Next steps I recommend
- Gather placement documents and start a simple support ledger (monthly entries for food, housing portion, clothing, medical costs).
- Ask the placing agency for a written statement of payments and whether they consider payments qualified foster-care payments.
- Schedule a meeting with a tax preparer early — if your situation is borderline (support percentage, midyear placement), professional help prevents incorrect claims and the need to amend returns later.
Professional disclaimer
This content is educational and based on the author’s professional experience and public IRS guidance current in 2025. It is not a substitute for personalized tax advice. For specific tax decisions, consult a licensed tax professional.
