Financial Resources for Grandparents Raising Grandchildren

Finances are a common problem for the 2.3 million grandparents who are raising their grandchildren today. To help with the day-to-day expenses, there are a wide variety of programs and tax benefits that can make a difference in stretching your budget. Here is an overview of different benefits that are available to help families.

Financial Assistance

A first step is to determine whether your family qualifies for your state’s Temporary Assistance for Needy Families (TANF) program, which may include cash assistance, food benefits, utility bill assistance and free or low-cost daycare. If your household income is too high to qualify as a family, ask about the “child-only grant” which is based solely on the grandchildren’s income and needs.

You should research if you are eligible for foster care payments as a relative caregiver or if your state offers any additional programs like guardianship subsidies, non-parent grants or kinship care. Adoption assistance payments are also available to adopted grandchildren with special needs. To inquire about these programs, contact your state’s TANF program or your state’s Department of Human Services. Contact information for each state can be found by visiting ACF.hhs.gov/ofa/map/about/help-families.

Your grandchildren may also be eligible for Social Security, including benefits for dependent children, survivor benefits or Supplemental Security Income. Visit SSA.gov or call 800-772-1213 for more information. Your grandchildren may also qualify for free or low-cost health or dental coverage through your state’s Medicaid or Children’s Health Insurance Program. A comprehensive list of resources and coverage information can be found at InsureKidsNow.gov or by calling 877-543-7669.

You may also use Benefits.gov, the official benefits website of the federal government. This website has a helpful screening tool that identifies programs you and your grandchildren may be eligible for and will direct you to the appropriate agency for applications.

Tax Benefits

In addition to financial assistance programs, there are a range of tax benefits that you may qualify for including the Earned Income Tax Credit, for those with moderate to low incomes, and the Child Tax Credit, which is worth up to $2,000 per qualifying dependent. If you are working and are incurring childcare expenses, the Child and Dependent Care Credit may be claimed. If you legally adopt your grandchildren, the Adoption Tax Credit also provides a federal tax credit of up to $16,810 in 2024.

You may deduct medical and dental expenses if you and your qualified dependent grandchildren’s healthcare costs exceed 7.5% of your adjusted gross income for the year. Furthermore, your qualified dependent grandchildren’s college expenses may be offset by an education-related tax credit, such as the American Opportunity tax credit and the Lifetime Learning tax credit. Besides tax credits and deductions, if you are unmarried and qualify for “head of household” status based on your dependent grandchildren when you file your tax return, you will benefit from a higher standard deduction and a lower tax rate than you would filing as single status.

Legal Help

You should consult with an attorney to discuss the pros and cons of obtaining legal guardianship, custody or adoption. Without formalized custody arrangements, you may not be eligible for many of the financial assistance programs listed above. Formal custody can also help with things like enrolling your grandchildren in school or consenting to medical treatment.

You may visit the Eldercare Locator, a public service of the U.S. Administration on Aging, online at www.eldercare.acl.gov/Public/Index.aspx or call 800-677-1116 for referrals to legal services in your area. There are also online resources that act as a clearinghouse for information on financial assistance, adoption and foster care.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.