Hi all,
I have a question. I know that adoption subsidy in not reportable as taxable income. I am wondering though does anyone know or have a resource they can point me to that says if there are other instances that I would be required, by law, to report it as income? For instance, applying for various consumer loans, applying for public assistance (such as help with utilities). I was thinking in these instances it is not required to be reported but can be via self disclosure. Any concrete info on this would be appreciated. Thanks!
Sorry no one has answered, but I don't think I've ever run into this before. I can say that for our house loan, we didn't state the subsidy as income because it doesn't show on our taxes and therefore would look inconsistent. I would think you'd be fine not reporting it for public assistance because you can use the argument that it isn't reportable as income on taxes.
we used it on our home loan app, and just sent in our aap agreement, bc quite frankly, we needed it to qualify for a bigger house bc we have an additional child. and along with the rest of the world, we make FAR less money this year than we did last year, and with the added dependant and based on our income alone we qualify for free lunch and wic.....HOWEVER, in our state, it clearly states that aap payments must be counted in your income level...which meant we no longer qualified. i don't know that there is a hard and fast rule that applies to all public assistance in all states though, so i'd check with whatever agency you would need to go through. but i know here they do not care if it is not reportable income, they made a place on the form for all unreported income for whatever reason and in the directions gave aap payments as an example.
Pretty much the only place I don't report it is on income tax. For all other applications I ask first. That usually throws them for a loop and they say to include it and then they will have to research if they count it or not. It has really varied in every instance. Just always ask to be on the safe side!
I appreciate everyone's feedback and comments on the subject. It is definitely hard finding something in concrete rules and regs on this other than not being reportable on income tax.
I know here in California you'd be required to disclose the adoption subsidy if you were applying for any type of public-assistance (welfare) program, including Medi-Cal (our version of Medicaid) and SSI. All types of income must be disclosed, even if it isn't subject to taxation. Some forms of non-taxable income are excluded during the application process, but they still must be reported.
I have emailed NACAC, Chris Morrison at IFCAA and Rick Peterson, asst. deputy director for Central Eligiblity Unit at DCS in Indy. Rick Peterson stated "The 1099 forms are being submitted by the State now that payments for Adoption Assistance have transitioned from the counties. The State is submitting these 1099 forms based on IRS guidelines on 1099's.
As the letter about the 1099's explained, the State cannot offer tax advise. So, continue to consult your tax preparer (or the IRS), as you referenced below, to ensure proper treatment of adoption assistance on your tax return. Every place that I checked states, the adoption subsidy is not taxable or reportable income. There is a very complete downloadable IRS publication at [url=http://www.nfpainc.org/]The National Voice of Foster Parents[/url] This is the National Foster Parent website. My thought is, it is not reportable taxable income. I have researched it for two days. I think everyone should band together on this. My attorney and NACAC are saying the state is wrong in sending out 1099 misc on our subsidies. The only time you have to include it is, if it is your ONLY income.