FOR IMMEDIATE RELEASE, Contact: (202) 225-3625
May 10, 2001
No. FC 7-A
Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways and Means, today announced that on Wednesday, May 9, 2001, the Committee ordered favorably reported, with amendment, H.R. 622, the "Hope for Children Act," H.R. 586, the "Fairness for Foster Care Families Act," and H.R. 1727, the "Fallen Hero Survivor Benefits Fairness Act of 2001," by voice vote.
DESCRIPTION OF H.R. 622 AS APPROVED:
Under current law, families who adopt children with special needs can claim a tax credit of up to $6,000 to help defray the costs associated with the adoption. The bill would increase the maximum credit to $10,000.
Families who adopt children without special needs may claim a credit of up to $5,000. The credit is set to expire after the end of this year. The bill would increase the maximum credit to $10,000 and extend it permanently.
The bill would allow the tax credit to be applied against the alternative minimum tax so that families are not subject to this tax as a result of claiming the credit.
Current law also provides an exclusion for payments received through an employer-provided adoption assistance program. The maximum exclusion is $5,000 ($6,000 for special needs adoptions), and it is set to expire after the end of this year. The bill would permanently extend the exclusion and increase the maximum exclusion to $10,000. The exclusion and credit cannot be claimed in connection with the same adoption expenses (same as current law).
The current law income phase-out range would increase from $75,000 - 115,000 to $150,000 - $190,000 of modified adjusted gross income. The provisions would be effective for taxable years beginning after December 31, 2001.
DESCRIPTION OF H.R. 586 AS APPROVED:
Under current law, families who care for foster children in their homes may receive payments from foster care agencies to help compensate them for the expenses they incur. These payments may be excluded from income if: (1) the payment is made by a State or local agency or a tax-exempt placement agency, and (2) the individual was placed by a State or local agency. Payments from tax-exempt placement agencies may be excluded, but only if the child is under the age of 19 at the time of placement.
The bill would expand the types of foster care payments that are eligible for exclusion. Specifically, the bill would allow the exclusion for foster care payments if the arrangements and payments are made by any agency that is licensed or certified by the State. The bill would also eliminate the age restriction for individuals placed by a tax-exempt agency. The provisions would be effective for taxable years beginning after December 31, 2001.
DESCRIPTION OF H.R. 1727 AS APPROVED:
Under current law, annuities paid to survivors of public safety officers who are killed in the line of duty may be excluded from income if the officer died after December 31, 1996. If the officer died before this date, the annuities are taxable.
The bill would allow survivor annuities to be excluded from income regardless of when the officer died. The provision would apply prospectively to annuity payments received after December 31, 2001.