1099 for adoption subsidy???

[alicia622]

I just recieved a 1099 stating the amount we recieved in subsidy payments has been reported to the IRS as taxable income. It never has been before- do you know if there have been changes re this or did the state agency mess this up? If there has been a change- can you post a link?

I don't mind if we are taxed on this however, I didn't plan for it so it will mess up our taxes this year. Thanks

[Polliwog]

I don't think anything's changed. This guide should be able to help, though: http://www.nfpaonline.org/uploads/20...its%281%29.pdf

[queenjane]

I thought subsidy was completely nontaxable??

[alicia622]

I think the state goofed up and now I have to try and convince them to fix their mistake so I don't have a problem with my federal taxes... I swear Maine has some of the most incompetent people running these agencies. It will probably take me until April 15th to get them to straighten it out.

[Polliwog]

Did you do any respite this year? I think that's taxable income but adoption/foster subsidy isn't.

[alicia622]

no respite- I have checked with a couple of local parents- one said she gets the form every year and they don't include it in their income and the other got one last year-called the state and they said it was sent in error. I think it's a mistake or maybe I'm reading the form incorrectly I am going to call on Monday to get it figured out. I am relieved there wasn't a tax change making subsidies taxable!

[MommyKelly]

We already filed our taxes, and our tax lady said it is non taxable.

[MissinNYC]

the IRS website says it's non taxable. It's technically not income, it's reimbursement for assumed costs.

[alicia622]

LOL...
So I called the state today to find out why they are reporting this as income to the feds and low and behold- they totally goofed and have to send out ammended forms because the way they have it recorded- the IRS will consider it to be income and none of our (adoptive/foster parents recieving payment) disclosed income will match what they have calculated.

It appears as though they received a lot of panicked calls because the lady I called had a message on her voicemail about this situation so she didn't have to answer a zillion calls about it. They are 'working on it' they 'don't know how long it will take for the paperwork to be fixed' and 'don't leave a message'.

ANNOYING but it could be worse!