LRB-2562/1
MES:kjf
2019 - 2020 LEGISLATURE
May 8, 2019 - Introduced by Representatives Rohrkaste, Doyle, Allen, Anderson,
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.
AB201,1,4 1An Act to amend 71.05 (6) (b) 22.; and to create 71.07 (6s) and 71.10 (4) (cs) of
2the 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
$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.
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:
AB201,1 1Section 1. 71.05 (6) (b) 22. of the statutes is amended to read:
AB201,2,92 71.05 (6) (b) 22. For taxable years beginning after December 31, 1995, an
3amount up to $5,000 that is expended during the period that consists of the year to
4which the claim relates and the prior 2 taxable years, by a full-year resident of this
5state who is an adoptive parent, for adoption fees, court costs or legal fees relating
6to the adoption of a child, for whom a final order of adoption has been entered under
7s. 48.91 (3) or by an order of a court of any other state, or upon registration of a foreign
8adoption 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)
.
AB201,2 10Section 2 . 71.07 (6s) of the statutes is created to read:
AB201,2,1111 71.07 (6s) Adoption expenses credit. (a) Definitions. In this subsection:
AB201,2,1312 1. “Claimant" means an individual who is eligible for, and claims, the federal
13credit.
AB201,2,1514 2. “Federal credit" means the federal tax credit for adoption expenses under
15section 23 of the Internal Revenue Code.
AB201,3,5
1(b) Filing claims. Subject to the limitations provided in this subsection, a
2claimant may claim as a credit against the tax imposed under s. 71.02, up to the
3amount of those taxes, an amount of up to $5,000 of qualified adoption expenses, to
4the extent that those expenses exceed the amount of the credit that a claimant is
5eligible for, and claims, under the federal credit in the year to which the claim relates.
AB201,3,76 (c) Limitations. 1. No credit may be allowed under this subsection unless it
7is claimed within the time period under s. 71.75 (2).
AB201,3,178 2. For a claimant who is a nonresident or part-year resident of this state and
9who is a single person or a married person filing a separate return, multiply the
10credit for which the claimant is eligible under par. (b) by a fraction the numerator of
11which is the individual's Wisconsin adjusted gross income and the denominator of
12which is the individual's federal adjusted gross income. If a claimant is married and
13files a joint return, and if the claimant or the claimant's spouse, or both, are
14nonresidents or part-year residents of this state, multiply the credit for which the
15claimant is eligible under par. (b) by a fraction the numerator of which is the couple's
16joint Wisconsin adjusted gross income and the denominator of which is the couple's
17joint federal adjusted gross income.
AB201,3,20183. The provisions contained in section 23 of the Internal Revenue Code, to the
19extent that they apply to the credit under that section, apply to the credit under this
20subsection, unless this subsection explicitly provides otherwise.
AB201,3,2421 4. The maximum amount of credit that may be allocated under this subsection,
22each fiscal year, is $500,000. If the amount of eligible claims under this subsection
23exceed $500,000 in any fiscal year, the department shall prorate the amount of credit
24that each eligible claimant may receive.
AB201,4,2
1(d) Administration. Subsection (9e) (d), to the extent that it applies to the credit
2under that subsection, applies to the credit under this subsection.
AB201,4,83 (e) Carry-forward. If a credit computed under this subsection is not entirely
4offset against Wisconsin income taxes otherwise due, the unused balance may be
5carried forward and credited against Wisconsin income taxes otherwise due for the
6following 5 taxable years to the extent not offset by these taxes otherwise due in all
7intervening years between the year in which the expense was incurred and the year
8in which the carry-forward credit is claimed.
AB201,3 9Section 3 . 71.10 (4) (cs) of the statutes is created to read:
AB201,4,1010 71.10 (4) (cs) The adoption expenses credit under s. 71.07 (6s).
AB201,4 11Section 4 . Initial applicability.
AB201,4,1512 (1) This act first applies to taxable years beginning on January 1 of the year
13in which this subsection takes effect, except that if this subsection takes effect after
14July 31, this act first applies to taxable years beginning on January 1 of the year
15following the year in which this subsection takes effect.
AB201,4,1616 (End)
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