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You could have client make 2 payments through direct pay with different bank accounts.

A slight correction. The portion of the proposed regs I quoted have to do with qualification for head of household. The section dealing with qualification for dependency is later in section 1.152-4(d)(2): https://www.federalregister.gov/d/2017-01056/p-365

Thank you all who put attention. I just found out IT IS A PREPAYMENT and will claim back when file the tax return. Thank you!

There is no requirement that the foster child live with them 6 months if they were placed later in the year. From Pub 501 https://www.irs.gov/publications/p501#en_US_2021_publink100091910 This was clarified in the 2017 proposed regulations on dependency section 1.2-2(c)(4) https://www.federalregister.gov/documents/2017/01/19/2017-01056/definition-of-dependent

Payments from the state are not considered as support from the child, so they do not enter into the calculation for the support test. As long as the child does not provide over half their support, the foster parents can claim them as a dependent, as long as all the other criteria are met. From IRS Pub 501 Example 2. You provided $3,000 toward your 10-year-old foster child's support for the year. The state government provided $4,000, which is considered support provided by the state, not by the child. See Support provided by the state (welfare, food benefits, housing, etc.), later. Your foster child didn't provide more than half of her own support for the year.

The 2017 regs also clarify that government payments to an individual used for support of that individual is support provided by a third party, not support by that individual. (The exception to this is Social Security benefits which are treated as support by the beneficiary.) Also, government payments used by the recipient to support another individual is support by the recipient, not support by a third party. In other words, government payments to the child are support by a third party, and government payments to the foster parent, if used to support the child, are support by the foster parent. The support requirement for a qualifying child is simply that the child not provide more than half of their own support - it is unlikely that they do unless the child is receiving Social Security survivor or disability benefits. See https://www.federalregister.gov/d/2017-01056/p-338

I have had a client with 3 states a few years ago and don't recall this as an issue. For now, could you duplicate the return, delete one of the other states leaving OH and see if the OH letter appears? Or check the KB to see if there is a limitation maybe. It doesn't seem as if there should be just because of multiple states. Do you have checked to combine federal and state letters? If so, there may be a limitation with that.

Could be the family is receiving monetary assistance and the child may be receiving medical benefits. Unlikely the family can show they provide enough to make the child a dependent, unless some sort of unpaid placement. On the other hand, any foster payment is likely not reportable as income. This assumes it is not a business setup, such as a group home of some sort. The letter may just be a confirmation of the time in placement, which comes in handy showing de facto parent status if the adoption is contested. Just my personal experiences…

IR-2022-143, July 26, 2022 WASHINGTON — As part of a special Security Summit series, the Internal Revenue Service, state tax agencies and nation's tax industry warn tax professionals to beware of evolving scams designed to steal client data. The Security Summit partners continue to see instances where tax professionals have been vulnerable to identity theft phishing emails that pose as potential clients. The criminals then trick practitioners into opening email links or attachments that infect computer systems with the potential to steal client information. https://www.irs.gov/newsroom/security-summit-warns-tax-pros-of-evolving-email-and-cloud-based-schemes-to-steal-taxpayer-data

You Youngins be nice........

Yeah, I should've used the sarcasm font...

Thanks, I think.

Welcome back to reality!

We use a spreadsheet that I developed years ago. Columns and color-coding (that had to be changed for one partner who is red-green colorblind) and italics and bold and more. Works like a charm for us. Or, did once I got my partners used to actually using it as a tool instead of a novelty they could ignore. I used it for 20+ years before then.

Back in May an IRS third-party debt collector contacted me for a debt owed by a former client. Well, I got another letter from them. They ignored the response I'd sent back in May, telling them it wasn't me and not to contact me again. They did have it on record that I'd sent them "something" - but the notation was from about a week ago. So right now we know that this particular company certainly got the contract based on criteria other than competence. You may imagine to your own heart's content what that might be. Finally got through to someone vaguely competent on the phone. This was for a partnership return, and the IRS told me over a year ago that my POA on file was no longer valid because the TMP who signed it had died. However, that same IRS told the debt collectors that my POA was valid, and they are required to contact the POA instead of the deadbeat if there is a POA on file. So I had to dredge up the signed POA and fax that in to Memphis with "WITHDRAWN" on it, and hope that Memphis CAF actually processes that withdrawal instead of discarding it as applying to a POA that is invalid. I swear if these people were competent they'd be dangerous. They sure cause enough trouble with their incompetence. But that's where it stands - I have to get the IRS to withdraw my POA that they told me was invalid but told their debt collectors was active. All of this may hinge on someone at the Memphis CAF Unit having a clue. God help me. Hi. I was away for a week and had a lovely time and came back to this *&^$%$ mess. Welcome home?