Embryos can now be claimed as a dependent on Georgia state income tax returns by residents.
According to guidelines provided by the state’s Department of Revenue, any “unborn child with a detectable human heartbeat” may be eligible for a $3,000 state income tax deduction for 2022, beginning on July 20.
The statement comes in the wake of the U.S. Supreme Court decision to overturn Roe v. Wade, which ended the federal right to an abortion and led to restrictions in Georgia and other states.
States do tend to imitate one another, despite the fact that it’s uncertain whether other states will do the same, according to Richard Auxier, senior policy associate at the Urban-Brookings Tax Policy Center.
“It is an anti-abortion piece of legislation,” He added, elaborating on how the tax break won’t help the majority of lower-income families.
Tax deductions are often less valued than tax credits since they are more challenging to claim, and many taxpayers choose to itemise their deductions instead of taking the standard deduction, according to Auxier.
“For most low-income families, there is no benefit at all,” he said. “And for the rest of them, we’re talking tens of dollars.”
Complexities in deduction is a ‘tax person’s nightmare’
The announcement left many questions among tax experts which is unanswered due to its scant information.
“This is a situation where we may have to have some really, really uncomfortable conversations, particularly if things didn’t go well,” registered agent Adam Markowitz, vice president of Howard L Markowitz PA, CPA, stated.
Financial experts have questioned the eligibility of each parent for the deduction, what happens in the event of multiple births, and what happens if the pregnancy results in a miscarriage.
“It’s a tax person’s nightmare,” Markowitz added.
Since the tax system doesn’t accurately depict how many families actually look, the legislation also raises concerns about how “dependents” are defined in terms of tax policy, according to Auxier.
It can be challenging to determine who gets the benefit when unmarried parents live in separate residences, he added.
How to provide the required supporting documentation
According to the guidelines, if the Department of Revenue requests them, “relevant medical records” or other “supporting documentation” must be given. But it’s not known what could be needed precisely.
“High-income families have the resources to go ask their primary care physician for the supporting documents,” Auxier said. “But most families aren’t going to have the time or money to schedule yet another appointment.”
More details, such as instructions for filing a tax return to claim the tax credit for a “unborn child with a detectable heartbeat,” are expected later this year, according to the Georgia Department of Revenue.
