Connections

By Gail Underwood Parker

Many foster parents wonder how their foster child/ren may affect their tax return. Each person is responsible for his or her own taxes and is free to consult with experts. Last year (for tax year 2005) there was a new definition of foster child for tax purposes. The information below is quoted directly from last year’s (tax year 2005) Form 1040 directions.

“A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

• Foster children are considered in determining:
• Dependency exemptions (Form 1040, line 6c)
• Child tax credits (Form 1040, lines 52 and 56)
• Head of household filing status (Form 1040, line 4)
• Credit for child and dependent care expenses (Form 1040, line 48)
• Earned income credit (EIC) (Form 1040, lines 66a and 66b)