ABC 6 Investigates: Adoption Tax Change

Posted at: 11/26/2013 6:31 PM
By: Ellery McCardle

(ABC 6 NEWS) -- November is National Adoption Month. For one Rochester family, it's a special reminder of their two children.
But they're frustrated with how the state is dealing with a so called financial benefit for adoptive families.
To help ease adoption costs, some employers offer a reimbursement. For years, Minnesota did not tax that money, but now it is.
Aaron and Kristy Norman believe the change will discourage people from adopting.
For them, there's no greater love than their children. Isaac and Haddie.
"We just love adoption. We've seen how beautiful it is," said Aaron Norman.
When he and his wife Kristy adopted Isaac in 2010, the process cost nearly $30,000 but Aaron's employer, Mayo Clinic, reimbursed $10,000 tax-free.
"It's an incredible benefit," said Norman. That reimbursement helped make adoption affordable for the Normans.
When the couple adopted Haddie in January of this year, they got another $10,000 from Mayo Clinic and assumed that would also be tax free. But that's not the case.
"It just doesn't seem right to me," said Kristy Norman.
This year, state lawmakers did not extend the tax-free benefit for those receiving employer-provided adoption assistance. It's something the state offered for the past 17 years, according to the Minnesota Department of Revenue.
Now the Normans owe about $700 more in taxes.
"700 dollars is a lot for Kristy and me," said Aaron Norman.
Especially since Aaron's job is the family's only source of income.
"They are one of many groups who've lost benefits," said democratic senator Kathy Sheran of Mankato, MN.
She says the benefit was not included in the state's tax bill. A bill she supported.
"My priority for me as it was for the majority in the legislature was to do what we had to do to stop this process of deficit spending," said Sheran.
The norman's reached out to Senator Sheran and other lawmakers, but they're still frustrated.
"Do you think it's okay to make money off adoptions? I think it's despicable. We need to make adoption more affordable for people," said Aaron Norman.
The Normans will only have to pay the tax for this year, because that's when they adopted Haddie.
In the meantime, they'll continue to push lawmakers to reinstate the benefit.