Foster Care boarding home and adoption subsidy maintenance payments are not considered as family income for income tax purposes, but either may be considered as income for other purposes such as determining eligibility for subsidized housing. Government agencies, financial institutions, and others processing applications for financial assistance have different definitions of income, that in some instances include foster care and adoption subsidy payments. Below are some guidelines and rules for the consideration of foster care and adoption subsidy income/payments for Federal and NYS financial assistance programs. See the expanded document, Income Considered (pdf) for reference source details and links.
A. Food Stamps
Foster Care Payments: The treatment of foster care payments depends on whether or not the child, for whom payments are received, is included in the food stamp household. If a child is included in the FS household, then the foster care payments for that child are included as income when determining the eligibility for that household. If a child is not included in the FS household, foster care payments are excluded. Source: NYS OTDA 08-ADM-04
Adoption Subsidy Payments are included as unearned income. Adoption subsidy payments in excess of allowable expenses may not be excluded as income and are considered to be unearned income to the FS household. Source: NYS OTDA 08-ADM-04
B. Temporary Assistance (TA) - aka public assistance
Foster Care Payments are not included as income for purposes of applying for Temporary Assistance. A child on whose behalf a relative or caretaker is receiving foster care is not considered under 18NYCRR to be residing in the home of the relative or caretaker. This means that a child on whose behalf foster care is being received is not considered for filing unit or other budgetary purposes. Source: NYS OTDA 08-ADM-04
Adoption Subsidy Payments: The treatment of adoption subsidy income depends on whether or not the child (for whom subsidy is received) is included in the family household. If the adopted child is included in the household composition, subsidy income is included. If the child is not included, subsidy income is excluded. The social services district may only include the child and the attendant subsidy income when it has been determined it is financially beneficial to the family for the child to be included. Source: NYS OTDA 08-ADM-04
C. Subsidized Housing
Foster Care Payments: are not included as the child is not a permanent member of the family. Source: HUD Occupancy Handbook 4350.3, Section 1,Chapter 5 ( 5-6,A,3,h):
Adoption Subsidy Income: is included in the adoptive family’s income up to $480.00 a month. Any amount over $480 is excluded. Source: HUD Occupancy Handbook 4350.3, Section 1,Chapter 5 ( 5-6,A,3,g)
D. Supplemental Security Income (SSI)
Foster Care Payments: are not deemed as available income in determining eligibility for SSI. Source: http://www.socialsecurity.gov/ssi/spotlights/spot-deeming.htm
Adoption Subsidy Payments are included in the adoptive family's income when determining eligibility for, and the amount of a disabled child’s SSI benefit. If the child is eligible, the amount of the SSI payment is reduced dollar for dollar by the amount of the adoption subsidy. Source: ACF Child Welfare Policy Manual, 8.2B.12 TITLE IV-E, Adoption Assistance Program, Eligibility, SSI.
E. Free or Reduced School Meal Programs
Foster Care Payments: are not included as income if the foster parent is applying as a household for other children not in care. Children in foster care are considered a household of one and must have a separate application submitted and signed by a member of the child’s household, a court official or other agency with responsibility for the child. Source:USDA Eligibility Manual for School Meals Part 4, B, page 32.
Adoption Subsidy Payments are included in the adoptive family's income when applying as a household. Source: USDA Eligibility Manual for School Meals, Part 4, B, page 31.
F. Child Care Subsidies
Foster Care and Adoption Subsidy Payments are not included in the foster or adoptive family’s income. Source: NYS 07-OCFS-LCM-5.
Foster Care Payments are not included in family income when determining eligibility for low income families. Source: NYS DOH Medicaid Reference Guide, Section 2- Income, pages 150-152
Adoption Subsidy Payments: As adoption subsidy payments are not considered taxable income for IRS purposes they are not included in the family income when determining medicaid eligibility based on a family's modified adjusted gross income (MAGI). Source: NYS DOH TRANSMITTAL: 13 OHIP/ADM-03
H. Family and Child Health Plus Programs
Foster Care Payments: As both of these programs use the same budgeting methodology as Medicaid, foster care payments are not included in family income. Source: 01 OMM/ADM-6 and Office of Medicaid Management GIS 00 MA/007
Adoption Subsidy Income: Same as Medicaid, foster care payments are not included in family income. Source: 01 OMM/ADM-6 and Office of Medicaid Management GIS 00 MA/007
I. Non-parent Caregiver Financial Assistance (TA) Cases
Overview: Grandparents, other relatives, and non-relatives who are caring for children for whom they are not legally responsible are eligible to apply for Temporary Assistance (TA) for children in their care. Non-parent Caregivers the NYS OTDA recommended term to be used when referring to cases where there is a non-legally responsible caregiver caring for a children for whom they are applying for, or receiving TA; and includes both relative and non-relative caregivers. View a great resource about non parent caregiver grants from NYS Kinship Navigator
The child’s eligibility for TA is based solely on the child(ren)’s income and resources. Federal reporting requirements mandate that relative non-parent caregivers provide their income and resources as a condition of eligibility for the child(ren), however, they are not required to verify their income and resources. If the non-parent caregiver is in receipt of SSI and is receiving the live alone rate, the child(ren) moving in with them would move them to the living with others rate, which is generally lower. Source: NYS OTDA 05-INF-24, Non-parent Caregiver Cases and Temporary Assistance (TA)
J. Chapter 7 Bankruptcy Applications
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires the application of a "means test" to determine whether individual consumer debtors qualify for relief under chapter 7. If such a debtor's income is in excess of certain thresholds, the debtor may not be eligible for chapter 7 relief. As the means test excludes benefits received under the Social Security Act , the NACAC Adoption Subsidy Resource Center has determined that 100% of Title IV-E adoption subsidy payments should not be included as other income; even though some of the Title IV-E subsidy is paid by state and/or county, since the benefit is under Social Security Act. This is still an interpretation and we will update information if more becomes available.
Last modified: November 11, 2014