After the US Supreme Court struck down the constitutional right to abortion in June, lawmakers in various states began enacting various so-called pro-choice or anti-abortion laws. One such law in Georgia went into effect in July. Georgia’s abortion law prohibits abortion to the point where a “fetal heartbeat” can be detected by a doctor.
So, you might be wondering what Georgia’s abortion law, or any other abortion law, has to do with taxes. Well, recently the Georgia Department of Revenue clarified that a human fetus with a detectable fetal heart rate may qualify for a tax deduction, if you live in Georgia.
But even if you’re not a resident of Georgia, several other states could follow suit and start offering tax deductions for unborn children. And while tax breaks are generally beneficial, fetal tax deductions raise important new tax questions for states, the federal government and, yes, taxpayers like you.
Georgia Fetal Tax Deduction
In recently released guidance, the Georgia Department of Revenue stated that if you are a resident of Georgia, your fetus is considered a dependent for tax purposes effective July 20, 2022. This means that pregnant women living in Georgia may be able to claim a tax deduction for their fetus, or fetuses, on their tax returns.
Why is this happening now? Well, Georgia’s abortion law (also known by its bill number, HB 481, or its title, The Living Infants and Fairness Equality Act) was originally passed in 2019. But it got tangled up in litigation because at that time its restrictions on abortion were at odds with Roe vs. Wade. After U.S. Supreme Court overruling deerGeorgia’s abortion law was allowed to come into effect and was recently amended to state that a fetus is a legal entity in Georgia.
Thus, under Georgia law, the amount of dependent personal exemption is $3,000 for each unborn child. The Georgia Department of Revenue says for returns filed for the 2022 tax year, the guidelines apply to any taxpayer who has an unborn child with a detectable human heartbeat at any time on or after July 20, 2022. and until December 31, 2022. At this time, no information is available on how the unborn child deduction will apply after 2022.
Individuals in Georgia who wish to claim their fetus, or fetuses, may have to submit medical records or other documentation to support deductions. Under Georgia law, a doctor must determine whether a so-called “fetal heartbeat” can be detected. State guidelines point out that this can sometimes occur as early as the sixth week of pregnancy.
Unborn child deductions are claimed as “other adjustments” on line 12 of Schedule 1 of Georgia Tax Form 500 for 2022.
Tax credits for dependents
Federal law does not recognize a fetus as a person for tax purposes, so a fetus cannot be reported as a dependent on your federal tax return.
Instead, the rules for claiming a dependent on your federal return depend on the IRS’ definition of an “eligible dependent.” This is usually a child under the age of 19 or under the age of 24 if studying full time. But an eligible dependent can also be a child of any age who is permanently or totally disabled, or a so-called “eligible relative”.
The IRS has different tests that can help you determine if someone is a qualifying relative. There are also tips on the IRS website to help you determine if you are eligible to claim a dependent.
The fact that unborn children are not considered dependents on your federal taxes could be confusing for some people. For example, if you are a pregnant resident of Georgia and want to take advantage of the unborn child tax deduction, the number of dependents you will claim will vary between your federal and state tax returns. Typically, people claim the same number of exemptions and dependents on their federal and state returns.
In addition to potential tax confusion over what counts as a dependent, fetal tax deductions raise other tax-related issues. Some common questions asked by policy makers and the media in response to Georgia law involve situations such as surrogacy and miscarriages. For example, in the event of a miscarriage, would a tax deduction for the fetus granted at the beginning of the pregnancy be subsequently denied? With surrogacy, would the surrogate be allowed to claim the unborn child deduction? Or would the fetus deduction be reserved for the legal parent(s)?
Taxes and tax law can be complicated, so until Georgia issues additional guidance (which could happen later this year), it’s unclear what the specific rules will be for claiming the child deduction at to be born or how the fetal tax deduction might impact Georgians.
In the meantime, no matter which side you’re on in the abortion rights debate, it’s important to know that since the Supreme Court ended the constitutional right to abortion, more states can consider a fetus as a legal “person”. So if Georgia is the first state to allow a tax deduction for a fetus, it may not be the last.
As with any change in the law, it is important to stay informed. Keep an eye out for related tax provisions in your state. (For example, abortion rights groups are currently challenging Georgia’s abortion law in court.) You will also need specific advice on the medical documentation required. This type of information could help you determine which tax deductions are right for you or not.
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