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FAQ
  Individual Income Tax
Is foster care income taxable?
 
Answer:

Generally, foster care payments are not subject to federal or Michigan income tax. However, in a few situations when you receive a W2 or 1099, you will be subject to federal income tax. Those payments would be subject to Michigan income tax to the extent that they are included in your federal adjusted gross income.

Note: Any non-taxable foster care payments must be included in total household resources/household income when calculating a property tax credit or home heating credit or farmland preservation credit.