BILL ANALYSIS
AB 47
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Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 47 (Ma) - As Amended: April 20, 2009
Policy Committee: Revenue and
Taxation Vote: 8 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases from $2,500 to $5,000 the maximum adoption
credit allowed for families that adopt a foster child who is
over 12-years old or has lived in a group home for six of the 18
months prior to their adoption. The increased credit would
sunset on January 1, 2015.
FISCAL EFFECT
1)The Franchise Tax Board assumes a revenue loss of $45,000
based upon the assumption that 5% of the 1,700 taxpayers who
claim the adoption tax credit will incur costs of $7,000 per
year and therefore half of the difference between the
currently allowable $5,000 and $7,000 (i.e. $1,000) would be
applied to reduce tax liability.
2)Data from California's child welfare data system, however,
shows that over 1,000 children meeting the criteria specified
in this legislation are adopted from our foster care system
each year. Given that the adoptions credit is allowed for any
travel expenses, medical expenses, and other expenses related
to the adoption, it is possible that families incurring
significant costs for such things as pre-adoptive family
therapy, post-adoptive mental health services, or other mental
health treatments, or who are required to travel to another
part of the state for court proceedings, would be able to take
advantage of the increased credit. Therefore, if just 10 % of
these adoptive families were able to maximize this credit it
would result in $250,000 in lost General Fund revenue per
year.
AB 47
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COMMENTS
1)Purpose . This bill is intended to provide an incentive for
families to adopt older children from within the foster care
system. While approximately half the children in foster care
are 12 or older, only 15 % of the adoptions come from that age
group. According to the sponsors, the Child Welfare Directors
Association (CWDA) and the John Burton Foundation, youth in
foster care who find permanent placements with loving, adult
caregivers are more likely to achieve educational success,
less likely to become homeless, and are better able to
transition into adulthood.
2)Federal Adoptions Tax Credit . Federal law allows a
nonrefundable credit for "qualified adoption expenses" paid or
incurred by a taxpayer. For taxable years beginning in 2009,
the credit allowed for the adoption of a "child with special
needs" is $12,150. Children adopted from the foster care
system in California would meet the definition of "special
needs." The available adoption credit begins to phase out for
taxpayers with modified adjusted gross income (AGI) in excess
of $182,180 and is completely phased out for taxpayers with
modified AGI of $222,180 or more.
3)Adoptions Assistance Program (AAP) . Under current law,
families that adopt children from the state's foster care
program are eligible to receive a tax-free monthly grant until
the child reaches the age of 18 (or 21 if they have severe
disabilities) equal to the amount that child would have
received in a foster care home. The average monthly grant for
the AAP program is approximately $800 per month. The families
affected by this bill will all receive this benefit.
4)Related Legislation . AB 295 (Ammiano) extends a sunset date on
a pilot project designed to provide pre- and post-adoption
services for families that adopt older children from the
state's foster care system. That bill is currently pending
before this committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081