Clarification on Counting Foster Children and Foster Adults as Household Members

Q The October issue of the Insider stated that foster children are not counted when determining household eligibility. (See “How to Calculate Correct Income for Adults and Dependents.”) Is this correct in light of the most recent change to HUD Handbook 4350.3, and how do we account for income from foster children/adults?

A Foster children and foster adults are counted as household members. Special thanks to tax credit consultant Karen Graham for pointing out the error in the article (which has been corrected online). Establishing family size is an important first step to determining household eligibility. Family size determines the appropriate income limit for the household. Change 4 to the HUD 4350 Handbook made some changes to family size determination. Specifically, it removed foster children and foster adults from whom to exclude when determining family size for income limits. The HUD Handbook 4350 defines foster children and foster adults as follows:

Foster children. These are children who are in the legal guardianship or custody of a state, county, or private adoption or foster care agency, yet are cared for by foster parents in their own homes, under some kind of short-term or long-term foster care arrangement with the custodial agency. These children will generally remain in foster care until they are reunited with their parents, or until their parents voluntarily consent to their adoption by another family, or until the court involuntarily terminates or severs the parental right of their biological parents, so that they can become available to be adopted by another family. Therefore, the parental rights of the parents of these children may or may not have been terminated or severed, and the children may or may not be legally available for adoption.

Foster adults. A foster adult is usually an adult with a disability who is unrelated to the tenant family and who is unable to live alone.

It’s important to note that even though foster children and foster adults are now considered household members when determining family size, income received for the care of foster children and foster adults is still not counted. The Handbook states, “Payments received by the family for the care of foster children or foster adults are not counted. This rule applies only to payments made through the official foster care relationships with local welfare agencies" [HUD Handbook 4350.3, par. 5-6(A)(3)(G)].

While agency payments for the care of foster children or adults are excluded from income, earned and unearned income for foster children or adults may be included. According to the Handbook, include in annual income all unearned income received by foster children. Include in annual income all unearned and wage income received by foster adults. Remember not to include in annual income any state foster care payments received by the household for their care of a foster child or foster adult.