This is a plain-language summary, not tax advice
We cite the statute and IRS materials, but your return is yours. For anything beyond "is the per diem income?", a tax professional who has seen a foster family's return before is worth every penny.
Is the per diem taxable? Verified Oct 2026
No. Georgia's official foster parent site describes the per diem as a reimbursement paid "to assist in the room and board of each child placed in their home." The federal hook is IRC §131: gross income does not include "qualified foster care payments" made under a state foster care program to a provider caring for a foster child in the provider's own home. The IRS says the same in Publication 525: generally, a payment from a state "for caring for a qualified foster individual in your home is excluded from your income."
So the money that lands around the 15th each month is the state reimbursing you for costs you already carried. You don't report it as income, and you don't pay tax on it.
What does §131 actually exclude?
The exclusion covers payments made under a state foster care program for caring for a qualified foster child placed with you and cared for in your own home. Two edges of the rule worth knowing exist, straight from the statute:
- The care has to happen in your home — the provider's own residence. Verified Jul 2026
- For difficulty-of-care payments (extra amounts for higher-needs care), the exclusion is capped once you're paid for more than 10 children under 19, or more than 5 individuals 19 or older. Almost no Georgia family foster home is near those numbers. Verified Jul 2026
We use this box for something we couldn't confirm with an official source, or that is changing. See it on our list of everything we're still confirming
Edge cases we haven't verified — ask a professional
We have not independently verified how §131 applies to every Georgia payment type — for example respite reimbursements you receive for watching another family's placement, private-agency (CPA/RBWO) payment structures, or extended youth (18+) arrangements. If your situation isn't "DFCS pays me a per diem for a child living in my home," don't extrapolate from this page — bring it to a tax professional with the statute in hand.
Does Georgia tax it, even if the IRS doesn't?
In effect, no. Georgia's income tax calculation starts from your federal adjusted gross income — and the per diem never enters federal AGI in the first place, so it flows through untaxed at the state level too.
We use this box for something we couldn't confirm with an official source, or that is changing. See it on our list of everything we're still confirming
Pending professional review
That "Georgia follows" conclusion is how the math works on paper; it has not yet been blessed by a CPA reviewer for this site. Confirm with your preparer before relying on it for anything unusual.
Can I claim my foster child as a dependent?
Often yes — and it's a completely separate question from the per diem. Under the federal "qualifying child" rules, a foster child placed with you by an authorized placement agency or by court order counts the same as a biological child for the relationship test. The other big tests, at the conceptual level:
- Residency: the child lived with you for more than half the tax year. A placement that started in October usually won't qualify for that year; a placement that ran January through August usually will.
- Support: the child didn't provide more than half of their own support.
- Age and other tests also apply, same as for any child.
Where it gets genuinely tricky: children who moved between homes mid-year, relatives also trying to claim the child, and how the per diem interacts with the support test. The IRS's own rules and worksheets in Publication 501 (Dependents, Standard Deduction, and Filing Information) are the authority — and this is exactly the situation where a tax professional earns their fee. Individual situations vary a lot.
What about the EITC and the Child Tax Credit?
If your foster child is your qualifying child, credits like the Child Tax Credit and the Earned Income Tax Credit may follow. Whether they do — and how much — depends on your income, filing status, and the year's rules.
We use this box for something we couldn't confirm with an official source, or that is changing. See it on our list of everything we're still confirming
No dollar amounts here, on purpose
Credit amounts, income phase-outs, and refundability rules change every tax year, and a stale number on this page could cost you real money. Get the current-year figures directly from the IRS's credits and deductions for individuals pages (for example the Child Tax Credit) or your preparer — never from a community page's cached memory of last year.
One Georgia-specific note while we're here: the state's Qualified Foster Child Donation Credit (marketed by some organizations as the "Fostering Success Tax Credit") is a dollar-for-dollar Georgia income tax credit for people who donate to qualified foster child support organizations — it is not a payment to foster parents, and it requires preapproval through the Georgia Tax Center. Details: dor.georgia.gov. Verified Oct 2026
The January panic: "I never got a W-2 or 1099!"
Every January, new foster parents watch tax forms arrive for everything else in their life — and nothing arrives for the per diem. Foster families consistently report that no W-2 or 1099 shows up for it, and that lines up with what the payment is: the state describes the per diem as a reimbursement, the IRS says a payment from a state for caring for a qualified foster individual in your home is generally excluded from your income, and income-reporting forms exist to report income. No income, generally no form.
So a quiet mailbox in January is the expected outcome, not a paperwork failure. Two practical rules:
- Nothing arrived? That's the normal case. You still might want your own records — your monthly invoices and deposit history — if a preparer ever asks what the deposits were.
- Something DID arrive? If you receive a 1099 or other tax form connected to foster care payments (some private agencies and unusual payment types handle paperwork differently), don't ignore it and don't panic — verify with your agency what it represents, and take it to a tax professional.
Adopting from foster care? There's a federal adoption credit
If your foster placement becomes an adoption, a federal adoption tax credit exists — and adoptions of children from foster care who are determined to have special needs have their own, often more favorable, rules. The credit amount changes yearly, so we won't print a number; see the IRS Adoption Credit page (it has a section on children with special needs) for the current figure and rules, and raise it with your preparer in the year the adoption is finalized.
Georgia's separate (non-tax) adoption assistance program — monthly payments and one-time expense reimbursement — is its own topic with its own guide; ask your case manager or the SSAU about eligibility before finalization.
The honest bottom line
The per diem isn't taxed and no form should come for it. Claiming your foster child is usually possible after half a year of placement but has real moving parts. For everything past those two sentences: one hour with a tax professional who knows foster care beats twenty hours of forum threads.
Sources & verification
- 26 U.S.C. §131 — exclusion of qualified foster care payments; own-home rule; difficulty-of-care capslaw.cornell.edu Jul 2, 2026
- IRS Notice 2014-7 — treatment of certain payments to individual care providersirs.gov Jul 2, 2026
- IRS Publication 525 (2025) — "Foster care providers": payments for caring for a qualified foster individual in your home generally excluded from incomeirs.gov Oct 1, 2026
- fostergeorgia.com — per diem described as a reimbursement for room and board, monthly invoice cyclefostergeorgia.com Oct 1, 2026
- Georgia DOR — Qualified Foster Child Donation Credit (donation credit, preapproval required)dor.georgia.gov Oct 1, 2026
- IRS — Publication 501: dependents and qualifying child rulesirs.gov Oct 18, 2026
- IRS — Child Tax Credit (current-year figures live here)irs.gov Oct 18, 2026
- IRS — Adoption Credit, including rules for children with special needsirs.gov Oct 18, 2026
This page summarizes tax rules in plain language and is not tax, legal, or financial advice. Federal credit amounts change every tax year — if today is past our verified date, check irs.gov before filing, and confirm your individual situation with a tax professional.