change in family status -- foster child

[Guest Alley]

Is taking on a foster child for care a change in family status? Under the regs, a change in the number of dependents "as defined in section 152" constitutes a change in family status. Section 152 provides that a foster child can be a dependent if the child is a member of the taxpayer's household for the taxable year. Commentary I have read suggests that for Section 152 purposes, a foster child must reside with the taxpayer for an entire taxable year to qualify for the Section 152 deduction. Would the same one year requirement be imposed for Section 125 change in family status purposes?

[Guest kclark]

Yes, this would qualify under proposed reg. 1.125-4T as a change it status.

I do not interpret in Sec. 152(a)(9) that it must be for the "entire" taxable year.....rather "during" the taxable year.

This would greatly complicate the change in status regs. with regard to when coverage must be effective.

The only thing this would affect, would be whether or not the change in deductions for remaining coverage period could be taken on a pre-tax deduction. You may want to have a legal interpretation on the deduction issue!