Residents of Georgia may now claim embryos as dependents on their state income tax returns.
Any “unborn child with a detectable human heartbeat” may qualify for a $3,000 state income tax deduction for 2022, effective July 20, according to guidance released by the state’s Department of Revenue.
The announcement follows the U.S. Supreme Court’s decision to overturn Roe v. Wade, ending the federal right to abortion, triggering bans in Georgia and elsewhere.
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While it’s unclear whether other states will follow, jurisdictions do tend to copy one another, said Richard Auxier, senior policy associate at the Urban-Brookings Tax Policy Center.
“It is an anti-abortion piece of legislation,” he said, explaining how the tax break won’t support most lower-income families.
Typically, tax deductions are less valuable than tax credits because they are more difficult to claim, and many filers take the standard deduction rather than itemizing, Auxier said.
“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.”
Deduction intricacies are a ‘tax person’s nightmare’
With limited details, the announcement also leaves many unanswered questions among tax professionals.
“This is a situation where we may have to have some really, really uncomfortable conversations, particularly if things didn’t go well,” said Adam Markowitz, an enrolled agent and vice president at Howard L Markowitz PA, CPA.
Financial experts have asked which parent may claim the deduction, what happens with multiple births or if the pregnancy ends in a miscarriage.
“It’s a tax person’s nightmare,” Markowitz added.
The policy also raises questions about how tax policy defines “dependents” since the tax code doesn’t reflect what many families actually look like, Auxier said.
With unmarried parents living in separate households, it may be complicated to figure out who receives the benefit, he said.
How to provide ‘supporting documentation’
The guidance says “relevant medical records” or other “supporting documentation” must be provided if requested by the Department of Revenue. But it’s unclear exactly what may be required.
“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.”
The Georgia Department of Revenue said more information, including tax return instructions for claiming the tax break for an “unborn child with a detectable heartbeat” will come later this year.
