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Tax Rules for Adoption, Foster Care and Relatives Raising Kids

Authored By
Education for Justice
Because of the Covid-19 pandemic, tax return filing and tax payment deadline has been changed to July 15, 2020. This is for both federal and state taxes.
Federal: https://www.irs.gov/newsroom/payment-deadline-extended-to-july-15-2020
Minnesota: https://www.revenue.state.mn.us/our-response-covid-19 look under “Income Tax Deadlines.”

If I get money to take care of a child, does it count as income on my tax return?
The money you get for any of the following things, DOESN’T count as income on your taxes.

  • Cost of care payments
  • “Difficulty of care” payments (extra money you get if you care for a physically, mentally, or emotionally disabled foster children)
  • Adoption assistance that pays for child care
  • MFIP (Minnesota Family Investment Program), and SNAP (food stamps)
  • Caring for 10 or fewer children if the money comes from a for-profit child welfare agency that works under a contract with a government agency
     

You can use these payments to figure out the amount of the Minnesota Working Family Credits and the property tax refund.

The money you get for any of the following things is taxable and DOES count as income on your taxes.

  • Caring for more than 10 foster children
  • Keeping a bed available even if it is not used
  • Operating a group home
  • Caring for more than 5 people over the age of 19