Are Foster Parents Missing Out on the EITC?

By Roxy Caines


May is National Foster Care Month. The foster care system provides full-time substitute care for children. In 2018, more than 437,283 foster children lived in group homes, emergency shelters, and residential homes.

Foster families frequently miss out on the EITC and CTC because they don’t know that they are eligible. Although states reimburse foster parents for medical and day-to-day expenses, foster parents frequently still have trouble making ends meet.

It is especially important to connect these families to tax credits because foster care is an essential bridge to stability. About half of children who left foster care in 2018 rejoined their birth families or primary caretakers. Foster families play an important role in achieving this reunification.

Fortunately, foster parents may qualify for tax credits that provide a larger tax refund. To claim the EITC and CTC, foster parents must meet the same income, relationship, age, and residency requirements as other workers.

There are some additional considerations for foster parents.

  1. Foster care agencies including authorized government or private placement agencies and courts must legally place foster children in homes.
  2. Foster care payments do not count as income when determining eligibility for the EITC and the CTC.
  3. Legal guardianship of a child is not required to claim the EITC and CTC.
  4. A foster child does not have to be in the foster parent’s home at the end of the year to be claimed.

If you didn’t already know about these rules, you’re not alone. Outreach efforts are necessary to promote awareness and help foster parents get back the money they’ve earned.

Even if foster parents aren’t part of the primary audience you work with, you can help them learn about the tax credits and how to claim them. Here are two ways to get started.

  1. Partner with an association or support group.
    Collaborating with groups that specialize in working with foster parents will maximize your efforts. Support groups and associations seek additional resources to support their families. Visit Child Welfare Information Gateway to connect with state affiliates.
  2. Work with public foster care agencies.
    Child welfare agencies often interact with foster parents and can share tax credit information during trainings and home visits. Additionally, State Foster Care Managers can provide state-specific information about foster care policies.

For more outreach ideas see foster parents outreach strategies.

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