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Vol. 4, No. 1 • Fall 1999

Foster Parents ask DSS
Response by Joan S. McAllister, N.C. Division of Social Services

Question: How does being a foster parent affect me at tax time? Do I have to report board rate as household income? Do I have to report food stamps as income? Can I claim my foster child as a tax dependent? Can I claim what I spend on my foster kids above and beyond the board rate as a charitable contribution?

Reporting board payments. Board payments are not considered to be income for foster parents. For more on this topic, see IRS Pub. 17, Chap. 13, “Other Income.”

Food stamps. You do not have to report food stamps received by you or your foster children as part of your income.

Foster children as dependents. Foster parents cannot claim a foster child as a dependent unless they can document that they pay more than half of the support (as defined by the IRS in Pub. 501, “Exemptions, Standard Deduction, and Filing Information”) for the child. Few people fall into this category.

Charitable contributions. Foster parents can deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if they have no profit motive in providing the foster care and are not, in fact, making a profit. The children in question must be placed in your home by DSS or another qualified child-placing agency. IRS Pub. 17, Chap. 13, “Contributions You Can Deduct,” states that “you can deduct expenses that are: greater than any nontaxable payments you receive from the organization, and spent to provide support for those individuals.” Charitable contributions of this type must be well documented.

Need more information? The IRS has a very helpful website as well as live, 24-hour, 7-days-a-week telephone assistance. In North Carolina, call 800/829-1040. Or consult a tax professional in your community.

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Question: What is the “chain of command” of the county DSS? Does it go all the way up to the Governor?

North Carolina has a state-supervised, county-administered child welfare system. The “chain of command” for a county DSS agency, in order, is

  1. Social Worker
  2. Supervisor
  3. Program Manager (in larger agencies)
  4. Director
  5. Board of Social Services.

The state Division of Social Services has the responsibility to assure that county DSS agencies comply with applicable federal and state laws and policies. The Division does follow-up when there are reported violations of law or policy. State law gives the responsibility for decisions about individual cases to the county DSS Director. The Director also assumes responsibility for internal personnel actions such as hiring, firing, or disciplinary action.

Foster parents should feel free to contact DSS supervisory staff or the DSS Director with any concerns that cannot be resolved with the social worker.

Copyright © 2000 Jordan Institute for Families