New Abortion Law Changes Tax Deductions

After the U.S. Supreme Court in June overturned the constitutional right to abortion, lawmakers in various states began enacting a variety of either so-called pro-choice or anti-abortion laws. One such law in Georgia went into effect in July. Georgia’s abortion law bans abortion at the point where a “fetal heartbeat” can be detected by a doctor.

So, you may be wondering what the Georgia abortion law, or any other abortion law, has to do with taxes. Well, recently, Georgia’s Department of Revenue clarified that a human fetus with a detectable fetal heartbeat can qualify for a tax deduction—if you live in Georgia.

But even if you aren’t a Georgia resident, several other states could follow suit and start offering tax deductions for unborn children. And while tax breaks are generally beneficial, fetus tax deductions raise new and important tax questions for states, the federal government, and yes—taxpayers like you.

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Georgia Fetus Tax Deduction

In recently released guiidance, the Georgia Department of Revenue said that if you’re a Georgia resident, your fetus qualifies as a dependent for tax purposes as of July 20, 2022. That means that pregnant people living in Georgia may be able to claim a tax deduction for their fetus, or fetuses, on their state tax returns.

Why is this happening now? Well, Georgia's abortion law (also known as The Living Infants and Fairness Equality Act) was initially passed in 2019. But it was tangled in litigation because at that time, it's abortion restrictions were at odds with Roe v. Wade. After the U.S. Supreme Court overturned Roe, Georgia's abortion law was allowed to take effect and was recently amended to say that a fetus is a legal person in Georgia.

So, under Georgia's law, the amount of the dependent personal exemption is $3,000 for each unborn child. The Georgia Department of Revenue says that for returns filed for tax year 2022, the guidance applies to any taxpayer who has an unborn child with a detectable human heartbeat at any time on or after July 20, 2022, and through December 31, 2022. At this time, no information is available on how the unborn child deduction will apply after 2022.

People in Georgia who want to claim their fetus, or fetuses, may have to submit medical records or other documentation to support the deductions. Under Georgia law, a doctor must determine whether a so-called “fetal heartbeat” can be detected. The state’s guidance points out that this can sometimes happen as early as six weeks into a pregnancy.

Unborn child deductions are claimed as “other adjustments” on Line 12 of Schedule 1 of Georgia’s 2022 tax Form 500.

Dependent Tax Credits

Federal law doesn’t recognize a fetus as a person for tax purposes, so a fetus can’t be claimed as a dependent on your federal tax return.

Instead, rules for claiming a dependent on your federal return depend on the IRS definition of a “qualifying dependent.” That’s typically a child under 19 years of age, or under 24 years old, if they are a full-time student. But a qualifying dependent can also be a child of any age that is permanently or totally disabled, or a so called “qualifying relative.”

The IRS has different tests that can help you determine whether someone is a qualifying relative. There is also guidance on the IRS website to help you determine whether you are eligible to claim a dependent.

Unborn Child Tax Questions

The fact that unborn children don’t qualify as dependents on your federal taxes could be confusing for some people. For example, if you’re a pregnant Georgia resident and want to claim the unborn child tax deduction, the number of dependents that you would claim would vary between your federal and state tax returns. Typically, people claim the same number of exemptions and dependents on their federal and state returns.

In addition to potential tax confusion over what counts as a dependent, fetus tax deductions raise other tax-related questions. Some common questions that have been posed by policymakers and media in response to Georgia’s law, involve situations like surrogacy and miscarriage. For instance, in the case of miscarriage, would a fetus tax deduction granted early in the pregnancy later be disallowed? With surrogacy, would the surrogate be allowed to claim the unborn child deduction? Or would the fetus deduction be reserved for the legal parent or parents?

Taxes and tax law can be complicated, so until Georgia issues additional guidance (which could happen later this year), it’s hard to know what the specific rules for claiming the unborn child deduction will be or how the fetus tax deduction might impact Georgians.

Abortion in Georgia: Stay Informed

In the meantime, no matter which side of the abortion rights debate you are on, it’s important to know that since the Supreme Court ended the constitutional right to abortion, more states may consider a fetus to be a legal “person.” Consequently, while Georgia is the first state to allow a tax deduction for a fetus, it may not be the last.

As with any change to law, it is important to stay informed. Keep an eye on related tax provisions in your state. (For example, abortion rights groups are currently challenging Georgia's abortion law in court.) Additionally, if you currently reside in Georgia, you may want to consider any potential impacts of claiming an unborn child as a dependent. You will also need specific guidance on what medical documentation is required. That kind of information could help you determine which tax deductions do, or don’t, make sense for you.