SB 191

This bill creates a nonrefundable individual income tax credit for adoption

expenses incurred by an individual who is eligible for, and claims, the federal

adoption expenses credit under section

23

of the Internal Revenue Code. The credit

may be claimed for an amount of qualified adoption expenses, up to $5,000, to the

extent that the expenses exceed the amount that the claimant is eligible for, and

claims, under the federal credit. For claimants who are nonresidents or part-year

residents of Wisconsin, the credit that may be claimed is prorated based on the ratio

of the claimant's Wisconsin adjusted gross income (AGI) to federal AGI. The

maximum credit that may be claimed each fiscal year by all claimants is $500,000.

If the total amount of eligible claims exceed this amount, the Department of Revenue

must prorate the amount of credit that each claimant may receive.

If the credit amount that the claimant is eligible for exceeds the claimant's taxes

due, the claimant may carry forward the unused credit for up to five years. Generally,

under the bill, the provisions of the federal credit, including the definitions of

qualified adoption expenses and eligible child, the maximum income phaseout

provisions, the determination of the years in which the credit may be claimed for

expenses paid or incurred, and the provisions relating to foreign adoptions apply to

the credit created in the bill. Under the federal credit, which is nonrefundable also,

the available credit begins to phase out for 2018 for taxpayers with modified AGI in

excess of $207,140, and is completely phased out for taxpayers with MAGI of

$247,140.

Also under this bill, the current law $5,000 deduction from Wisconsin AGI for

adoption expenses may be claimed only to the extent that the adoption expenses are

not claimed under the federal credit or the credit created in this bill.

Because this bill relates to an exemption from state or local taxes, it may be

referred to the Joint Survey Committee on Tax Exemptions for a report to be printed

as an appendix to the bill.