Are certain foster care payments included in gross income?

Foster care payments are generally not included in gross income for tax purposes. This exclusion applies to payments received by foster parents to care for a child placed in their home by a governmental body or a qualified agency. The Internal Revenue Service (IRS) specifically states that these payments are meant to cover the costs of caring for the child and are not considered income to the foster parent.

This is significant because it allows foster parents to receive these payments without incurring additional tax liability, thus supporting their role in providing care for children in need. The focus on care-oriented financial support underscores the distinction between income meant for personal gain versus payments designated for the benefit of others, reinforcing the understanding that foster care arrangements are service-based. That is why the selected answer is appropriate for this question.