Local adoption agencies and adoptive parents praised a new congressional bill introduced Wednesday that will help alleviate many of the cost barriers associated with domestic and foreign adoptions.
If passed, "Fairness for Adopting Families Act," sponsored by Sen. Orrin Hatch, R-Utah, will provide a tax deduction of up to $5,000 for non-reimbursable and legitimate adoption expenses. Hatch is the ranking Republican on the Senate Labor and Human Resources Committee.His bipartisan bill, co-sponsored by Sen. Steven D. Symms, R-Idaho, will exclude from an employee's gross income up to $5,000 in payments made by an employer for adoption expenses. Additionally, it will permit employers to deduct as business expenses contributions made to adoption expense plans.
Corporations such as Dow Chemical, IBM, Digital Equipment, American Express and Honeywell currently offer adoption benefits.
"It seems the bill would be a real fair break for folks. There have been a number of tax-incentive (adoption) bills introduced, but this is the most comprehensive and most generous bill I have seen," said Merrily Rigley, director of Adoption Advocates International. "It would certainly encourage adoption."
Hatch's goal is to make adoption more affordable.
"To many seeking to adopt a child, the costs associated with such a procedure are simply prohibitive. Data provided by the National Committee for Adoption show that the actual costs connected with legal adoptions can exceed $15,000," he said. "Family wealth should not be the determinative factor in adopting a child."
Carol Lee Jones, an adoptive mother from Farmington, agrees. "Adoption expenses do add up, and the bill would benefit people who can't afford the expenses incurred," said Jones, who with her husband, Gordon, has adopted a son from Brazil and is now adopting three children from Rocky Ford, Colo.
Jones is well-acquainted with the government red tape tied to every domestic and foreign adoption. Like Hatch, she believes the government should help pay the expenses in some cases.
"There are some people who can handle the expenses. They should take the burden off the government," she said. "The problem (with the bill) is people who don't need the help will take advantage of it."
Hatch's bill addresses Jones' concern.
Families with taxable incomes up to $60,000 can deduct 100 percent of qualified expenses (up to $5,000) with a gradual phase-out of the benefit from $60,000 to $70,000 annual income.
The proposed legislation applies to all legal adoptions whether the child is a healthy infant, a child with special needs or one from a foreign country.
However, it does not provide deductions for expenses for relative adoptions or those administered through illegal practices, such as through a baby broker.
"Many adopting parents in my own state of Utah and in other states have been defrauded by such schemes," Hatch said. "The cost of an illegal adoption often exceeds $25,000, most of which goes into the pockets of middlemen. Fees for such unconscionable arrangements should not and would not be deductible."
In an age of budget crunches, Hatch acknowledges his bill could face opposition from his colleagues on the Senate's Finance Committee. But he's convinced money for the bill can be found and "this legislation will save the treasury money - not lose it."
The bill, Hatch said, will "move thousands of children, who might otherwise have lingered in foster care, into loving homes." The tax deduction also encourages shifting medical costs to the adopting family and away from "more expensive AFDC and Medicaid systems."
Most importantly, the bill will ensure American laws "treat families formed through adoption the same as families formed biologically," Hatch said.
- Provides a tax deduction of up to $5,000 for non-reimbursable and legitimate adoption expenses.
- Makes deduction available whether taxpayer itemizes or not.
- Includes both relative adoption and foreign travel not associated with requirements of a foreign adoption as non-tax deductible expenses.
- Excludes from employee's income adoption expenses paid by an employer up to $5,000.
- Treats employer contribution to adoption expense plan as an ordinary and necessary business expense.
- Applies to qualified adoption expenses incurred in taxable years beginning after Dec. 31, 1990.