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Daycare and Taxes>Foster Parent Daycare
Leigh 08:38 AM 03-13-2014
I am a foster parent and provide daycare services to foster kids placed with other families. Is the "foster parent daycare" taxable income? I am paid by the state's Child Care Services for a portion of my fee and the remainder is paid by the Department of Social Services (included on my foster care payment check).

I used to be paid the remainder in cash (the foster parents were reimbursed directly), but now that it is included in my check as "foster parent day care", I am questioning myself about whether it IS taxable income. I guess I am just hoping it is not, because a large portion of my income is from foster kids.

Any advice?
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TomCopeland 11:05 AM 03-13-2014
Originally Posted by Leigh:
I am a foster parent and provide daycare services to foster kids placed with other families. Is the "foster parent daycare" taxable income? I am paid by the state's Child Care Services for a portion of my fee and the remainder is paid by the Department of Social Services (included on my foster care payment check).

I used to be paid the remainder in cash (the foster parents were reimbursed directly), but now that it is included in my check as "foster parent day care", I am questioning myself about whether it IS taxable income. I guess I am just hoping it is not, because a large portion of my income is from foster kids.

Any advice?
Foster care income from a state agency is not taxable. See the IRS article: http://www.irs.gov/irb/2014-4_IRB/ar06.html
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Leigh 12:04 PM 03-13-2014
Originally Posted by TomCopeland:
Foster care income from a state agency is not taxable. See the IRS article: http://www.irs.gov/irb/2014-4_IRB/ar06.html
I know that income from MY OWN foster kids is not taxable. So, if I am being paid to provide daycare for foster kids placed in OTHER homes, is that also not taxable? If so, is ALL of it not taxable, or just the part that comes from the Department of Social Services (the other part comes from the state's Child Care Services-which is actually an office of the Department of Social Services). The income I get from low-income parents who have custody of their kids is taxable. So, for foster kids that are NOT mine, what do I claim as income?
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Solandia 01:06 PM 03-13-2014
Originally Posted by Leigh:
I know that income from MY OWN foster kids is not taxable. So, if I am being paid to provide daycare for foster kids placed in OTHER homes, is that also not taxable? If so, is ALL of it not taxable, or just the part that comes from the Department of Social Services (the other part comes from the state's Child Care Services-which is actually an office of the Department of Social Services). The income I get from low-income parents who have custody of their kids is taxable. So, for foster kids that are NOT mine, what do I claim as income?
Yes, it is income. Only the stipend for foster kids placed in your home is not considered income, it is support. Also, money received for respite care(if you are providing respite for another foster family) IS taxable, even if it comes on the same check.
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Leigh 01:18 PM 03-13-2014
Originally Posted by Solandia:
Yes, it is income. Only the stipend for foster kids placed in your home is not considered income, it is support. Also, money received for respite care(if you are providing respite for another foster family) IS taxable, even if it comes on the same check.
Thank you. Having it come on the same check is what confused me, and then having it state it was for "foster day care" made me think that maybe I was missing out on a big savings, since it appeared they were paying me as a foster parent instead of daycare provider.
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TomCopeland 03:00 PM 03-13-2014
Originally Posted by Leigh:
I know that income from MY OWN foster kids is not taxable. So, if I am being paid to provide daycare for foster kids placed in OTHER homes, is that also not taxable? If so, is ALL of it not taxable, or just the part that comes from the Department of Social Services (the other part comes from the state's Child Care Services-which is actually an office of the Department of Social Services). The income I get from low-income parents who have custody of their kids is taxable. So, for foster kids that are NOT mine, what do I claim as income?
I misunderstood. Income you receive for caring for foster children (not living with you - foster child of another parent) is income, whether the money comes from the state or from the parent. Money you receive for respite care is also income.
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Leigh 09:24 AM 03-14-2014
Thank you for the answers. I thought that it was income, but got my hopes up when the state appeared to be treating me as a foster parent!
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Tags:foster care, tax advice
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