Payments For Providing Foster Care
Foster parents receive a payment from the child welfare agency in the state they reside in. Funding to state agencies comes from the Children's Bureau (part of the Administration for Children & Families). It's important to understand that a foster parent should not consider this as income. The money is a subsidy, not intended to compensate foster parents for their time.
Foster parents are volunteers for the foster care agency that licenses their home. They are not employees of the state. The services provided by the foster parents to the state take the form of care to the children they volunteer to take in.
Foster Care Subsidies
States provide a monthly amount of money for each foster child within a home, called a foster care subsidy. Many adults become foster parents with the intention of it becoming a job or providing income for their family.
A foster care subsidy is intended to pay for the foster child’s needs. Sometimes, it's barely enough to cover those needs. In turn, many foster parents come out of pocket for a child's expenses, causing further financial instability for the foster family if they are relying on the subsidy for income.
Taxes, Loans, and Foster Care Subsidies
A foster care subsidy is not usually considered taxable income. You don't have to report it on your tax return. However, you might want to check with a tax professional if you're a foster parent.
Reporting a subsidy on your taxes may depend on how much you receive monthly and how long the child has been in your home. Your agency worker might also be able to answer some tax questions for you, but it's best to consult with a professional tax preparer.
Foster Parent Income
Prospective foster families are usually asked to provide proof of income during the application process. It's important for foster agencies to know that a family is able to provide for their own children without the foster care subsidy.
The foster care subsidy should not be considered as:
- Supplemental income
- A way to pay for vacations
- A means to buy a second or third car
- A way to pay off your home
- A way to pay for your own child’s clothing, after-school clubs, lessons or other activities
Final Thoughts For Fostering
You shouldn't become a foster parent with the goal of considering it a job. Foster parenting is work, just not the sort that is compensated with money. If you are considering becoming a foster parent, you should consider the benefits to the child over the benefits for yourself.
If you do not have the patience or aptitude to deal with children that have been abused, neglected, or abandoned then foster parenting may not be a good option for you.
Children that are in a foster program are in need of a support network, and people who are empathetic to the situation they are in. Fostering a child, teenager, or young adult is not a task that should be taken on lightly.
Patience, thoughtfulness, selflessness, and empathy are not given to you by an agency—you need to have them before opening your home or risk making a situation worse for a young person. Fostering can be a rewarding experience—just not financially.
IRS. "Publication 17, Your Federal Income Tax (For Individuals)," Page 94.
Accessed Oct. 6, 2020.