2019 - 2020 LEGISLATURE
May 8, 2019 - Introduced by Representatives Rohrkaste, Doyle,
Dittrich, Duchow, Horlacher, Knodl, Kulp, Mursau, L. Myers, Neylon,
Novak, Ohnstad, Plumer, Pronschinske, Quinn, Schraa, Shankland,
Sinicki, Skowronski, Snyder, Spiros, Spreitzer, Thiesfeldt, Tittl, Tusler,
VanderMeer, Vining, Wichgers, Zimmerman and Edming, cosponsored by
Senators Bernier, Carpenter, Jacque, Johnson, LeMahieu, Nass, Olsen,
Stroebel and Wanggaard. Referred to Committee on Ways and Means.
1An Act to amend
71.05 (6) (b) 22.; and to create
71.07 (6s) and 71.10 (4) (cs) of 2
the statutes; relating to: creating a nonrefundable individual income tax
3credit for certain adoption expenses and modifying eligibility for the adoption
4expenses tax deduction.
Analysis by the Legislative Reference Bureau
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
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.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
71.05 (6) (b) 22. of the statutes is amended to read:
(b) 22. For taxable years beginning after December 31, 1995, an 3
amount up to $5,000 that is expended during the period that consists of the year to 4
which the claim relates and the prior 2 taxable years, by a full-year resident of this 5
state who is an adoptive parent, for adoption fees, court costs or legal fees relating 6
to the adoption of a child, for whom a final order of adoption has been entered under 7
s. 48.91 (3) or by an order of a court of any other state, or upon registration of a foreign 8
adoption under s. 48.97 (2), during the taxable year, to the extent that such expenses
9are not claimed under section 23 of the Internal Revenue Code or under s. 71.07 (6s)
71.07 (6s) of the statutes is created to read:
71.07 (6s) Adoption expenses credit.
. In this subsection:
1. “Claimant" means an individual who is eligible for, and claims, the federal 13
2. “Federal credit" means the federal tax credit for adoption expenses under 15
of the Internal Revenue Code.
(b) Filing claims
. Subject to the limitations provided in this subsection, a 2
claimant may claim as a credit against the tax imposed under s. 71.02, up to the 3
amount of those taxes, an amount of up to $5,000 of qualified adoption expenses, to 4
the extent that those expenses exceed the amount of the credit that a claimant is 5
eligible for, and claims, under the federal credit in the year to which the claim relates.
. 1. No credit may be allowed under this subsection unless it 7
is claimed within the time period under s. 71.75 (2).
2. For a claimant who is a nonresident or part-year resident of this state and 9
who is a single person or a married person filing a separate return, multiply the 10
credit for which the claimant is eligible under par. (b) by a fraction the numerator of 11
which is the individual's Wisconsin adjusted gross income and the denominator of 12
which is the individual's federal adjusted gross income. If a claimant is married and 13
files a joint return, and if the claimant or the claimant's spouse, or both, are 14
nonresidents or part-year residents of this state, multiply the credit for which the 15
claimant is eligible under par. (b) by a fraction the numerator of which is the couple's 16
joint Wisconsin adjusted gross income and the denominator of which is the couple's 17
joint federal adjusted gross income.
3. The provisions contained in section 23
of the Internal Revenue Code, to the 19
extent that they apply to the credit under that section, apply to the credit under this 20
subsection, unless this subsection explicitly provides otherwise.
4. The maximum amount of credit that may be allocated under this subsection, 22
each fiscal year, is $500,000. If the amount of eligible claims under this subsection 23
exceed $500,000 in any fiscal year, the department shall prorate the amount of credit 24
that each eligible claimant may receive.
. Subsection (9e) (d), to the extent that it applies to the credit 2
under that subsection, applies to the credit under this subsection.
If a credit computed under this subsection is not entirely 4
offset against Wisconsin income taxes otherwise due, the unused balance may be 5
carried forward and credited against Wisconsin income taxes otherwise due for the 6
following 5 taxable years to the extent not offset by these taxes otherwise due in all 7
intervening years between the year in which the expense was incurred and the year 8
in which the carry-forward credit is claimed.
71.10 (4) (cs) of the statutes is created to read:
(cs) The adoption expenses credit under s. 71.07 (6s).
(1) This act first applies to taxable years beginning on January 1 of the year 13
in which this subsection takes effect, except that if this subsection takes effect after 14
July 31, this act first applies to taxable years beginning on January 1 of the year 15
following the year in which this subsection takes effect.