# § 131. Certain foster care payments
**(a)** **General rule** Gross income shall not include amounts received by a foster care provider during the taxable year as qualified foster care payments.
**(b)** **Qualified foster care payment defined** For purposes of this section—
**(1)** **In general** The term “qualified foster care payment” means any payment made pursuant to a foster care program of a State or political subdivision thereof—
**(A)** which is paid by—
**(i)** a State or political subdivision thereof, or
**(ii)** a qualified foster care placement agency, and
**(B)** which is—
**(i)** paid to the foster care provider for caring for a qualified foster individual in the foster care provider’s home, or
**(ii)** a difficulty of care payment.
**(2)** **Qualified foster individual** The term “qualified foster individual” means any individual who is living in a foster family home in which such individual was placed by—
**(A)** an agency of a State or political subdivision thereof, or
**(B)** a qualified foster care placement agency.
**(3)** **Qualified foster care placement agency** The term “qualified foster care placement agency” means any placement agency which is licensed or certified by—
for the foster care program of such State or political subdivision to make foster care payments to providers of foster care.
**(A)** a State or political subdivision thereof, or
**(B)** an entity designated by a State or political subdivision thereof,
**(4)** **Limitation based on number of individuals over the age of 18** In the case of any foster home in which there is a qualified foster care individual who has attained age 19, foster care payments (other than difficulty of care payments) for any period to which such payments relate shall not be excludable from gross income under subsection (a) to the extent such payments are made for more than 5 such qualified foster individuals.
**(c)** **Difficulty of care payments** For purposes of this section—
**(1)** **Difficulty of care payments** The term “difficulty of care payments” means payments to individuals which are not described in subsection (b)(1)(B)(i), and which—
**(A)** are compensation for providing the additional care of a qualified foster individual which is—
**(i)** required by reason of a physical, mental, or emotional handicap of such individual with respect to which the State has determined that there is a need for additional compensation, and
**(ii)** provided in the home of the foster care provider, and
**(B)** are designated by the payor as compensation described in subparagraph (A).
**(2)** **Limitation based on number of individuals** In the case of any foster home, difficulty of care payments for any period to which such payments relate shall not be excludable from gross income under subsection (a) to the extent such payments are made for more than—
**(A)** 10 qualified foster individuals who have not attained age 19, and
**(B)** 5 qualified foster individuals not described in subparagraph (A).
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**Source Credit**: (Added Pub. L. 97–473, title I, § 102(a), Jan. 14, 1983, 96 Stat. 2606; amended Pub. L. 99–514, title XVII, § 1707(a), Oct. 22, 1986, 100 Stat. 2781; Pub. L. 107–147, title IV, § 404(a)–(c), Mar. 9, 2002, 116 Stat. 41.)
## Editorial Notes
### Prior Provisions
A prior section 131 was renumbered .
### Amendments
2002—Subsec. (b)(1). , amended provisions preceding subpar. (B) generally. Prior to amendment, text of such provisions read as follows: “The term ‘qualified foster care payment’ means any amount—
“(A) which is paid by a State or political subdivision thereof or by a placement agency which is described in section 501(c)(3) and exempt from tax under section 501(a), and”.
Subsec. (b)(2)(B). , amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “in the case of an individual who has not attained age 19, an organization which is licensed by a State (or political subdivision thereof) as a placement agency and which is described in section 501(c)(3) and exempt from tax under section 501(a).”
Subsec. (b)(3), (4). , added par. (3) and redesignated former par. (3) as (4).
1986—Subsec. (a). amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “Gross income shall not include amounts received by a foster parent during the taxable year as qualified foster care payments.”
Subsec. (b). amended subsec. (b) generally. Prior to amendment, par. (1) “In general” read as follows: “The term ‘qualified foster care payment’ means any amount—
“(A) which is paid by a State or political subdivision thereof or by a child-placing agency which is described in section 501(c)(3) and exempt from tax under section 501(a), and
“(B) which is—
“(i) paid to reimburse the foster parent for the expenses of caring for a qualified foster child in the foster parent’s home, or
“(ii) a difficulty of care payment.”
and par. (2) “Qualified foster child” read as follows: “The term ‘qualified foster child’ means any individual who—
“(A) has not attained age 19, and
“(B) is living in a foster family home in which such individual was placed by—
“(i) an agency of a State or political subdivision thereof, or
“(ii) an organization which is licensed by a State (or political subdivision thereof) as a child-placing agency and which is described in section 501(c)(3) and exempt from tax under section 501(a).”
Subsec. (c). , in amending subsec. (c) generally, in par. (1)(A), substituted references to “qualified foster individual”, “such individual”, and “foster care provider” for references to “qualified foster child”, “such child”, and “foster parent”, respectively, and in par. (2) substituted “more than (A) 10 qualified foster individuals who have not attained age 19, and (B) 5 qualified foster individuals not described in subparagraph (A)” for “more than 10 qualified foster children”.
## Statutory Notes and Related Subsidiaries
### Effective Date of 2002 Amendment
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### Effective Date of 1986 Amendment
> “The amendment made by this section [amending this section] shall apply to taxable years beginning after
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### Effective Date
> “The amendments made by this section [enacting this section] shall apply to taxable years beginning after
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