The Ultimate Guide to Arizona’s Foster Care Tax Credit

What Is the Arizona Foster Care Tax Credit?

You know that raising kids is expensive, but did you know Arizona offers tax credits for foster parents? As an Arizona resident, you could be eligible for up to $500 per child in tax credits for providing foster care. Not bad, right? The AZ Foster Care Tax Credit was created to help offset costs for licensed foster parents like yourself. Things like clothes, shoes, school supplies, activities—it all adds up. This tax credit is Arizona’s way of saying thanks for opening your home and giving a child in need a safe, loving place to call home, even if just temporarily. In this article, we’ll walk you through everything you need to know about claiming this tax credit, how much you could receive, eligibility requirements, and more. By the end, you’ll be on your way to filing for this credit and putting some extra money in your pocket.

Who Qualifies for the Arizona Foster Care Tax Credit?

The Arizona foster care tax credit allows you to claim a dollar-for-dollar credit of up to $500 per year for qualifying expenses related to foster care in Arizona. 

What qualifies as an eligible expense?

Pretty much anything that directly benefits a foster child in your care can qualify, including:

– Clothing, shoes, diapers, and other personal items

– School supplies, fees, and uniforms

– Extracurricular activities and hobbies (sports, music, clubs)

– Tutoring or summer school

– Counseling and therapy costs 

– Travel costs related to visitations or medical care

To claim the credit, you’ll need records of your expenses like receipts, invoices, or statements. The total must be at least $500 to claim the maximum credit.  Any amount over $500 can be carried over up to 5 years.

How do I claim the credit? 

When filing your Arizona state income taxes, complete Arizona Form 352 to determine your credit amount.  You’ll enter the total qualified expenses for each foster child, up to $500 each. Submit Form 352 with your tax return.

The foster care tax credit is a great way for foster parents to get some relief from the costs of caring for a child in need.  Every dollar claimed is a dollar less in taxes you owe to Arizona, so take advantage of this opportunity and start keeping good records of the money you spend on your foster kids. They deserve our support, and this credit is one way the state is helping to provide it.

How to Claim the Arizona Foster Care Tax Credit on Your Taxes

To qualify for Arizona’s foster care tax credit, you need to be an Arizona resident who provides care for a child in foster care. This includes foster parents, relative caregivers, and private agency providers.

Requirements

To claim the credit, you must:

1. Be an Arizona resident for the full tax year. 

2. Provide full-time care for a child in foster care for at least 6 months of the year. The child must be under 18 years old or under 21 if they have a disability. 

3. Have an approved Form 816 from the Arizona Department of Child Safety certifying the child was in your care for the required time.

4. Meet income requirements. Your income cannot exceed $75,000 if you are single or $150,000 if married filing jointly.

The tax credit amount depends on the age of the children. It can be up to $500 per child for those under age 5, up to $400 per child ages 5 to 12, and up to $300 per child ages 13 to 21. The total credit cannot exceed $3,000 per year for up to 5 children. 

How to Claim the Credit

To claim the foster care tax credit, you will need to fill out  Arizona Form 321 when filing your state income taxes. Be sure to attach copies of the approved Form 816 for each child. The deadline to claim the credit is April 15th.

If you do not owe any state income taxes, you may still be eligible to receive the credit amount as a refund. This tax credit can help offset some of the costs of providing care for children in need. Every little bit helps, right?