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Bill would raise income tax credit for adoptive families

Special to the Legal News

Published: May 15, 2013

Representatives of Adoption Circle and Adoption Network Cleveland are lauding a new House bill that would increase the income tax credit given to parents who adopt a child.

Under current state law, parents who adopt a minor child receive a one-time tax credit of $1,500 that may be carried forward for two years.

Senate Bill 108, sponsored by Sen. Shannon Jones, R-Oxford, would raise the credit to $10,000, with a carry-forward of five years.

“There are many different routes that a family wanting to adopt may take, such as through the foster care system or through a licensed private adoption agency,” Jones said. “Each route toward adoption has costs associated with it, and can cost a family up to $40,000.”

Lucie Blumenthal, Adoption Circle co-founder and director of adoption services, said increasing the tax credit would further open the door for families of various socio-economic levels to adopt a child.

“SB 108, if passed, will have a positive impact on the recruitment of prospective adoptive families who can meet the needs of children who are in need of permanent homes and families,” she said. “We also realize the passage of SB 108 will, in our opinion, have a fiscal benefit to the state of Ohio.”

Blumenthal said many Ohio children need or will need the support of the state’s child welfare system.

“If passed, more families are recruited to adopt. Then these families adopt a child who is in need of a permanent family. Therefore, this child may no longer need or they may require less financial support from the Ohio financial child welfare system. These reasons are simple but strong,” she said.

Adoption Network Cleveland Executive Director Betsie Norris previously worked on the legislation that increased the tax credit from $500 to $1,500.

“I can personally attest to the positive impact this legislation will have,” she said.

Norris said there are many direct costs associated with adoption including agency fees, attorney’s fees and court fees.

“There are indirect costs as well, including expanding housing, furniture, counseling services and more. Allowing for a tax credit to help offset these costs will encourage families to adopt children into loving and permanent homes,” she said.

Aaron Ockerman, an ANC legislative agent, also touted the benefits of enacting SB 108.

“Over the years, ANC has had first-hand experience in noting the financial burdens that sometimes serve as barriers to adoption,” he said. “In addition to the costs we all bear in bringing children into our homes, adoptive parents face particular expenses.”

Like Jones, Ockerman noted that the costs can rise to as much as $40,000.

“Particularly in regard to foster care, the state has a very real interest in promoting adoption. The unfortunate reality is that youth who age out of foster care without being adopted often face a rocky future,” he said.

“Imagine the feeling of bouncing from family to family, and then, upon turning 18, being sent out on your own with no network of support.”

Ockerman said it is “no wonder” such young adults often end up relying on the state services like Medicaid, mental health treatment and, in some cases, rehabilitation.

“But there is good news,” he said. “Two recent studies indicate that for every dollar a state spends promoting adoption from foster care, it saves three dollars in future costs of social services programs.”

Ockerman said the economic benefits of enacting SB 108 are clear but added that “the true benefits are intangible.”

“SB 108 will result in more children having loving, permanent homes ... you simply cannot put a price tag on that,” he said.

In addition to its provisions for adoptive families, SB 108 would increase the state income tax deduction allowed for contributions to an Ohio 529 college savings program from $2,000 to $10,000.

“As you are all aware, the cost of higher education continues to rise nearly every year, which has made it difficult for young Ohioans to go to college without amassing an overwhelming amount of debt,” Jones said.

According to the Project on Student Debt, an initiative of the Institute for College Access & Success, 68 percent of 2011 college graduates in Ohio had accumulated student loan debt.

The average amount of debt was $28,683, which was approximately $2,000 higher than the national average, Jones said.

“Increasing the tax deduction for contributions to an Ohio college savings plan will allow families to save more money over time in order to prepare themselves for even higher educational costs, as well as help to reduce the debt that many students will still be forced to take on,” she said. “Not only will this bill make college more affordable and hopefully enable and encourage more young Ohioans to go to college, it will also help put us on par with our neighboring states.”

Jones said Michigan allows a deduction of up to $5,000 for single filers and $10,000 for joint filers, while Illinois allows for a $10,000 deduction for single filers and a $20,000 deduction for joint filers.

Pennsylvania offers a deduction for contributions of up to $12,000 and West Virginia allows a deduction for the full amount of any contribution.

“Indiana gives a 20 percent tax credit up to $5,000 in contributions per individual tax return per year, with a maximum yearly credit of $1,000,” Jones said. “Increasing our deduction up to $10,000 will put Ohio in line with these states and help make college more affordable for young Ohioans.”

SB 108 is co-sponsored by Republican Sens. Jim Hughes, Tim Schaffer and Joe Uecker.

The bill is before the Senate Ways and Means committee.

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