Tax Benefits for Taxpayers with Foster Children (Rev. 12-2006)
A child qualifies as your foster child for state income tax purposes only if either of the following conditions is met:
- An authorized placement agency placed the child with you.
- A court ordered that the child be placed with you.
A foster child may qualify you to use the:
- Head of Household filing status for tax year 2005. For the requirements, see Do I Qualify for Head of Household?
- Qualifying widow(er) with a dependent child filing status for tax
year 2005. See Form 540A
For information on adopted children placed by an agency, see Adopted Child.
For information on the Child and Dependent Care Expenses Credit, see Instructions for Form FTB 3506, Child and Dependent Care Expenses Credit.
California conforms to federal law in defining a foster child. However, while federal law provides for a Child Tax Credit and an Earned Income Credit for taxpayers who have an eligible child or foster child, California has no comparable credits.
Federal and California tax codes related to tax treatment of foster children
- Foster Care Payments Not Included in Gross Income - Internal Revenue Code (IRC) Section 131 and California Revenue & Taxation Code (R&TC) Section 17131
- Foster Child Defined - IRC Section 152(f)(1)(C) and R&TC Section 17056
- Child and Dependent Care Expenses Credit - IRC Section 21 and R&TC Section 17052.6
- Deduction for Foster Care Expenses as Charitable Contribution - IRC Section 170 and R&TC Section 17201
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