Adoptive and Foster Parent Association of Georgia (AFPAG)

Foster Parent Tax Information Available on the web

We invite you to share this information with resource families. Please note, however, that available benefits will vary depending on several circumstances: the types and amounts of payments families receive from agencies; amount of family earned income; and family size. These links provide the best foster parent tax information available on the web. You might want to search the web using Google, or other search sites, for "foster family tax", or "foster care tax".

Be sure to also check with your state department of revenue for any state tax implications for foster care.

Adoption Subsidy Tax Information-2005
Federal Adoption Tax Credit for Special Needs Adoption

In the summer of 2001, the Federal Adoption Tax Credit was updated. The most important update was to expand benefits to children with special needs adopted from the U.S. foster care system. Originally families adopting from the foster care system could claim the adoption tax credit, provided they had qualifying expenses. Unfortunately, the IRS list of qualifying expenses was limited to the cost of the adoption process, but not the day-to-day costs of raising a child with special needs. So starting in tax year 2003, families adopting a child with special needs from foster care, had access to this same tax credit without needing to document expenses. For tax year 2004, the tax credit is $10,390 and you have up to five year in which to use it.
• The first question many people ask, or are asked by their tax preparer is, "How do I know if my child is considered to have special needs according to the IRS?" The North American Council on Adoptable Children interprets the publication to say: if you receive an adoption subsidy (assistance) for your child, it means the state that provides the subsidy has determined your child has special needs. Your adoption subsidy agreement is the evidence that the state has determined your child to have special needs.
IRS publication 968, which can be found at http://www.irs.gov/publications/p968/ar01.html#d0e511 , is quoted below: Special Rule for Adopting a Child With Special Needs. The maximum credit and exclusion, subject to the income and tax liability limits discussed earlier, will be allowed for the adoption of a child with special needs even if you do not have any qualifying expenses . For 2004, the maximum amount for each is $10,390.

• Child with special needs. An eligible child is a child with special needs if he or she is a citizen or resident of the United States (including U.S. possessions) and a state (including the District of Columbia) determines that the child cannot or should not be returned to his or her parents' home and probably will not be adopted unless adoption assistance is provided to the adoptive parents. Factors used by states to determine if a child has special needs could include:
• The child's ethnic background,
• The child's age,
• Whether the child is a member of a minority or sibling group, or
• Whether the child has a medical condition or physical, mental, or emotional handicap.

If your state has determined that the child you are adopting is a child with special needs, you should keep evidence of that fact for your records.

• The second most common question is, "What does this mean to our family?" We don't know the specific answer to that question because we don't do your taxes. However, we can help you figure it out. Many people believe the Federal Adoption Tax Credit won't help them because they get a refund every year, but that isn't necessarily true. A refund means you have overpaid what you owe in federal income tax, so the IRS refunds you the amount overpaid. The tax credit is applied against what you owe, and could reduce it to $0, which would increase your refund. The amount that you owe is the number you come up with from the tax tables (or the number in line 28 of the 1040A, or line 45 of the 1040). Here are some examples of how the tax credit might benefit your family.
• Family one is a couple who adopts a sibling group of two children with special needs. They typically have $6,500 in federal income tax withheld from their paychecks, and the tax that they owe is $7,000, which means they owe $500 in April. Now, with the adoption tax credit, they have $20,780 in credits, and this year they could use up to $7,000 of the credit.1 This will mean they get a refund this year of $6,500, and will have at least $13,780 of tax credit to carryover for up to four years.
• Family two is a single mother who adopts a sibling group of three children with special needs. Typically she has $5,000 in federal income tax withheld from her paychecks, and the tax that she owes is $4,000, which means she receives a refund of $1,000 in April. Now, with the adoption tax credit, she has $31,170 in credits, and this year she could use up to $4,000 of the credit.1 This will mean she will get a refund this year of $5,000, and will have at least $27,170 of tax credit to carryover for up to four years.

• Information for filling out Form 8839: Qualified Adoption Expenses:
If you do your own taxes, you may have a couple questions when you fill out Form 8839.

What do you do when they ask for qualifying expenses on line 5 and you didn't have any? Go to page 3 of the instructions for 8839, which can be found at http://www.irs.gov/instructions/i8839/ch02.html#d0e616, quoted below, it says: But, if you adopted a child with special needs and the adoption became final in 2004, enter $10,390 on line 5.
• What if the tax you owe is less than $10,390? Then you will also need to fill out the Credit Carryforward Worksheet on page 4 of the instructions for 8839. This is how you are able to carry the remaining credit forward for up to four years.

If you have questions on the adoption tax credit, contact the North American Council on Adoptable Children at 651-644-3036 or adoption.assistance@nacac.org.

If you can claim the child tax credit (see IRS publication 972) or other credits, you should claim them.

Internal Revenue Service publications- www.irs.gov
Publication 525: Taxable and Nontaxable Income
Publication 968: Tax Benefits for Adoption
Facts about Tax credits for Working Families - EIC and Child Tax Credit

By far the greatest need and highest level of activity for AFPAG is supporting Foster Parents. The need for continuing training to address the problems Foster Parents face in helping Georgia's neglected and abused children rises every day. That's one of our major services - to lend support that is so desperately needed.

We do that in a number of ways - education, training, advocacy, communications and information provision. We'll continue to expand our efforts in each of these areas, which are covered in various places on our web site.

And, now it seems as though DHR is giving US a little bit more support. Here is some exciting news from DHR:

Here is a new effort by DHR to encourage more people to sign up as foster parents. This project roles out in only certain counties, but if successful, could role out statewide, according to Kathy Herren, AFPAG liaison to DHR.

According to Tanya Moore, Resource Director for Butts, Pike, Upson and Lamar Counties, there is a $500 reward being offered to any current foster parent that recruits another family to attend the IMPACT training classes, and the new recruit must turn in all documents and have their home study approved. This incentive is offered to foster families who reside in the counties of Butts, Pike, Upson, Lamar, Spalding, Heard, Troup, Carroll, Coweta, and Meriwether, and there could be additional Metro counties (check with your resource development worker to see if it includes your county). And, if that family you sign up is approved and is willing to take children with special needs, you will also be rewarded another $100 and an extra $50 if that approved family you sign up takes more than 3 children.

Furthermore, for ALL foster parents across Georgia (includes ALL counties in Georgia) an extra $100 will be paid to foster families who agree to take a sibling group of 3. This affects foster families across Georgia who currently have a sibling group of 3 or more already in their foster home. This amount of $100 will be paid per child per month to the foster family who takes, or already has, a sibling group of 3 or more (up to $400). Check with your local resource development department for further questions or details on this incentive.

Introduction to the AFPAG Association and the EMBRACE Pilot Initiative

History:
AFPAG held it first meeting in 1973 as the Foster Parent Association of Georgia with approximately ten members in attendance. It has since evolved to be one of the largest foster parent organizations in the Nation. One of the main goals for AFPAG is to unify all foster parents, agency representatives and communities to benefit children who have been abused, neglected or abandoned and come into the foster care system for a safe, loving environment. Several years ago, adoptive parents were recognized, and the name was changed to reflect the growing number of adoptions occurring as the result of foster parents adopting their children. Today approximately 85% of all DHR adoptions are by foster parents. For these children, AFPAG works in cooperation with public and private welfare agencies to improve foster care and adoption processes, support foster/adoptive families and provide educational training related to family need within the foster care system.

General Purpose:
AFPAG concentrates on training and education of adoptive/foster parents and others working in the fields of adoption and family foster care. This educational emphasis also encourages the retention of foster families by offering networking and support of parents as they meet and relate to other foster parents who may be dealing with similar issues. There is an educational conference held annually for families to enjoy. The Annual Educational Conference is held each year at Jekyll Island, Ga. And is the largest state foster/adoptive parent conference of it's kind in the nation. Support, networking, information and more are all part of the educational emphasis of AFPAG

Goals and Objectives as they relate to the EMBRACE project, and in context for the work we want to undertake:
Over the last several years as the number of children coming into care has increased in the State of Georgia, AFPAG has sought to encourage members to recruit new foster families. Realizing that foster parents, who love the work they do with children, can be the best recruiters of other foster parents, AFPAG seeks to encourage these existing families to contact friends, relatives, and acquaintances to help provide quality homes and services to meet the growing need in this State. AFPAG encourages Sub-Regional Vice Presidents from their staff to keep close contact with local county associations to enhance mutual co-operation and communication among foster parents, child welfare agencies, and other community individuals directly connected with the foster care system.

AFPAG seeks to encourage the retention and recruitment of quality foster homes through close contact of local foster parent associations with Sub-Regional Vice Presidents, community individuals, Faith Based organizations dealing with children's issues, and others directly connected with the child welfare system.

Since the infrastructure of AFPAG currently addresses the ability to have close contact with all foster parents in the state, AFPAG recently took on the task of becoming involved with a pilot program to work in partnership with EMBRACE (The Foster Family Foundation) and DHR (Department of Human Resources) with the goal of recruiting new quality foster homes for teen and sibling groups. This Pilot program is currently underway in Fulton and Dekalb counties, but AFPAG will work in three Southern Counties (Thomas, Colquitt, and Mitchell). The Sub-Regional Vice Presidents along with ESP (Independent Contractors) and Community Resources (Faith Based Organizations) will be responsible for advertising, foster to foster referral, private and public announcement, and marketing strategies including orientation and informational speeches at local churches, malls, recruitment fairs, and foster parent organization meetings.

AFPAG retains the responsibility for contacting local association presidents within their respective counties for the purpose of informing the group of the pilot project, gaining confidence in the project and help with the recruitment of new foster families through a foster family to foster family effort. Sub-Regional Vice Presidents, local association presidents, or qualified foster parents may assist trainings as co-leaders and experienced foster parents will offer on going support and information sharing during and after the recruitment.

Evaluation of the program with EMBRACE will be on going as part of the consultation.

The local county DFCS offices in Thomas, Mitchell, and Colquitt counties will be informed and updated as the pilot unfolds. AFPAG plans to work closely with each county to see that foster parent needs are communicated as they are recruited.

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