Ask AF: Adoption Reimbursement

Adoption tax assistance can make a huge difference to your family. But what if your employer "isn't qualified"?

Q: I found that I couldn’t exclude my adoption reimbursement from my income on my taxes because my employer’s program is not “qualified.” My HR department advised me that the costs of filing the plan “outweigh the benefit to the company.” What might these costs be? I’m considering lobbying my company’s president to file it.

A: Your HR department was probably referring to the annual requirement to report plan activity using IRS Form 5500. The IRS may investigate if any red flags are raised by the information given. Also, there is some cost involved with the reporting, but it is relatively small. A nudge from one or more employees should convince your company that the goodwill generated will be worth the cost.

I’d suggest the following resource to educate yourself before your meeting:

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