One of the benefits of owning an adult family home is the exclusion of certain income received by the owner. You should check with your CPA or tax preparer for more information and to confirm that your income is, in fact, exempt. There are many sources of information about this unique benefit, and the Internal Revenue Bulletin found at the link below gives a good explanation.
The rule basically says that when a person provides “foster care” in their own home, the revenue received for resident place in the home is not included in the person’s taxable income. So this only appears to apply to those owners who live in their adult family home along with their residents – and that is many.
If you own an adult family home and you’re not familiar with this tax rule, you will want to learn more right away. Check with your tax preparer to find if you qualify and, if you do, if you’ve taken advantage of this benefit. You might even have a refund coming if you need to go back and correct tax returns from prior years.