Mo. Senate scales back adoption tax credit

JEFFERSON CITY, Mo. (AP) - Missouri's incentive to adopt children from other countries could be coming to an end.

Legislation that passed the Senate this past week would eliminate a $2 million annual allotment of tax credits for parents who adopt children from outside of Missouri, leaving the tax break in place only for Missouri children.

The tax credit is intended to help cover nonrecurring adoption costs, such as home visits and legal fees, and is limited to $10,000 per child. Under current law, Missouri offers $2 million of incentives annually for in-state adoptions and an additional $2 million for out-of-state adoptions.

Sen. Jolie Justus, D-Kansas City, attached an amendment eliminating the tax breaks for out-of-state adoptions to a broader bill that extends tax credits for various benevolent organizations. She said she wasn't aware Missouri even offered an incentive for out-of-state adoptions until she served on Gov. Jay Nixon's Tax Credit Review Commission, which recommended eliminating the program.

"With 10,000 to 11,000 kids in the state of Missouri that need to be adopted, if we are going to incent people to adopt kids, we should be incenting them to adopt kids in the state of Missouri and not outside," Justus said.

The state finalized 1,143 adoptions of children in the state's foster care system during the 2012 fiscal year, but 16,500 children remained in state custody during that same period, according to a Missouri Department of Social Services report. Not all of those children were available for adoption, however, because their parents' rights had not yet been terminated.

Missouri's adoption tax credits are restricted to children with "special needs," which has a fairly broad definition under state law.

Lori Ross, president and CEO of the Midwest Foster Care and Adoption Association, said special needs can include children with disabilities, sibling groups of three or more children, children with prenatal exposure to drugs or alcohol and minorities. Ross said anyone who is "not your typical healthy white baby" could be considered special needs under current incentive programs.

The broad definition is what has allowed people to use tax credits to adopt children from other countries.

In the 2012 fiscal year, a total of $1 million in tax credits were redeemed for both in-state and out-of-state adoptions.

The attempt to eliminate the out-of-state adoption incentive isn't the first time Missouri has tried to scale back adoption subsidies. In 2005, a measure enacted by then-Gov. Matt Blunt sought to eliminate subsidies for the adoptive parents of 2,000 former foster children based on their income, but a court struck down the law.

Even if Missouri eliminates its incentive for international adoptions, federal subsidies are still available. Under current law, Missourians can't use the state incentives if they are being assisted by the federal government.

The legislation is headed to the House.

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