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Old 03-12-2013, 03:19 PM   #1
chellt
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taxes question

I am not looking for free professional answers. Just personal experience/knowledge or a point in the right direction.....

I am single with no children. I make around 45,000 a year. I get about a 400-600 refund every year.

I am in the process of becoming a foster parent. I will be paid a monthly stipend.

My question: How will this affect my taxes? I don't want to end up OWING at the end of the year! If so, what do I need to change so this doesn't happen?
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Old 03-12-2013, 04:35 PM   #2
Cheshire Figment
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1. Payments made by a state or qualified foster care placement agency as "difficulty of care payment" or to reimburse a foster home provider for the expenses of caring for an individual placed by them are excluded from gross income. So they are not reported on your tax return and it will do nothing to increase your taxes.

2. If you are providing the majority of the support costs for the child you are entitled to claim the child as a dependent. And fair rental value of part of the house is considered as support, as well as food, clothing, vacations, transportation, etc. So this will reduce your taxes.

3. You may also be able to file as Head of Household instead of as Single, which is a lower tax rate so this will lower your taxes.

Mike (CPA Retired but still doing taxes)
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Old 03-12-2013, 04:58 PM   #3
chellt
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Thank you Mike! Just worried me that I would end up owing more!
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