I am so confused. I keep reading that the money I received for foster care placement is non taxable income. However, I received a 1099-misc for this money.

Forum|Forum|6 years ago
June 5, 2019
2 replies
0 views

When I add it to wages, I lose over $600 in my refund. So, how do I add it as nontaxable income? Also, where can I claim expenses for the foster care placement? Some of the money on the 1099-misc was reimbursement for purchases I made for the child. Thank you.

TurboTax Premier Online

Best answer by NancyG

Foster care payments are non-taxable. Do not enter the 1099-Misc if you receive one.

Internal Revenue Bulletin: 2014-4

Section 131(a) excludes qualified foster care payments from the gross income of a foster care provider.

Section 131(b)(1) defines a qualified foster care payment, in part, as any payment under a foster care program of a state or a political subdivision that is either (1) paid to the foster care provider for caring for a qualified foster individual in the foster care provider’s home, or (2) a difficulty of care payment.

NancyGAnswer

Employee

Foster care payments are non-taxable. Do not enter the 1099-Misc if you receive one.

Internal Revenue Bulletin: 2014-4

Section 131(a) excludes qualified foster care payments from the gross income of a foster care provider.

tinagraves4

Won't this open me up for a audit by not reporting and explaining why I am not claiming the money on the 1099?

DaneKathryn

Foster Care is non-taxable but if you did Respite Care it IS taxable and must be claimed.

caengland

The agency who we did foster respite care through in Washington State has not sent paperwork showing what we have been paid and when I asked, they seemed to be confused as to whether or not respite care income is taxable. If it is taxable, shouldn't I be provided a form from the agency showing how much they paid us?

DawnC

Employee

Yes, the payer should provide a tax form IF the income is taxable/tax-deductible for them. Did the foster care recipient(s) live with you while you received the income? @caengland

Qualified foster care payments - From IRS

Section 131(a) excludes qualified foster care payments from the gross income of a foster care provider.

Section 131(b)(1) defines a qualified foster care payment, in part, as any payment under a foster care program of a state or a political subdivision that is either:

(1) paid to the foster care provider for caring for a qualified foster individual in the foster care provider’s home, or
(2) a difficulty of care payment.

Section 131(b)(2) defines a qualified foster individual as any individual who is living in a foster family home in which the individual was placed by an agency of a state or political subdivision or by a qualified foster care placement agency.

Section 131(b)(3) defines a qualified foster care placement agency, in part, as a placement agency that is licensed or certified for the foster care program of a state or political subdivision of a state.

Section 131(c) defines a difficulty of care payment as compensation to a foster care provider for the additional care required because the qualified foster individual has a physical, mental, or emotional handicap. The provider must provide the care in the provider’s foster family home, a state must determine the need for this compensation, and the payor must designate the compensation for this purpose. In the case of any foster home, difficulty of care payments are not excludable to the extent that the payments are for more than 10 qualified foster individuals who have not attained age 19 or 5 qualified foster individuals who have attained age 19. See § 131(c)(2).

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"