Friday, April 15, 2011

On death and taxes

I'm a tax person and when you are a tax person, you tend to think of everything in relation to tax. For example, when I read blogs with "sponsors" I can't help but wonder if those bloggers are reporting that income on their individual income tax returns. I am doubtful that they are receiving a Form 1099 for their services. I would be hesitant to provide my social security number to a business acquaintance I have only had dealings with over the internet.

Do you see what I mean? Tax, tax, tax.

So now let's talk about what happens when your baby is stillborn. When your baby is stillborn, you are issued a Death Certificate. And you immediately realize how ironic it is that one can be issued a death certificate but not a birth certificate? How can you die if you didn't exist?

Many states (including Massachusetts) offer a Certificate of Birth Resulting in Stillbirth. Many, many states do not and there are many, many grieving parents out there who are fighting to change that. When your baby is stillborn, you feel as if the world wants to forgot that your baby ever existed. Wouldn't it be easier for everyone else if that were the case? There wouldn't be any awkward moments. No one would have to feel bad because you feel bad.

When your baby is stillborn, you want to scream at the top of your lungs. "I HAD A BABY TOO. I CARRIED A BABY INSIDE OF ME FOR 9 MONTHS. I WAS IN LABOR FOR MORE THAN 24 HOURS. I PUSHED FOR 4 HOURS. I KNOW THE PAIN OF CHILDBIRTH. I HAD A BABY TOO."

But no one hears you.

I remember the exact moment when I thought of tax in relation to Abbey. Almost three months had passed since her death and I unknowingly was a few weeks pregnant again. It was a weekend in August and I had decided to paint the downstairs half bath. One of several projects that had not been finished prior to Abbey's birth. I painted the trim a nice, crisp white and chose a lilac color for the walls.

As I stood on the step stool painting the wall above, a thought hit me. Abbey. Dependent. Tax return. Because I view the world from a tax perspective. I dropped the paintbrush and ran upstairs to the nook that had been turned into our office. I patiently waited for the computer to fire up and then made my way to the IRS website.

In the year 2006, taxpayers were allowed a deduction of $3,300 for each dependent. What I want to clarify here is that if you had a baby on December 31st, you would still take the deduction of $3,300. If you had a baby and she lived for a day, you would still take the deduction of $3,300.

Here is a direct quote from the 2006 filing instructions: "If your dependent child was born and died in 2006 and you do not have an SSN for the child, you can attach a copy of the child's birth certificate instead and enter "Died" in column (2)."

When your baby is stillborn, you don't receive a birth certificate.

Additional research confirmed that stillborn babies do not qualify for the dependent exemption.

Now let's look at the 2010 filing instructions. "If your dependent child was born and died in 2010 and you do not have an SSN for the child, enter "Died" in column (2) and include a copy of the child's birth certificate, death certificate, or hospital records. The document must show the child was born alive."

Talk about a kick in the teeth. Thank you for visiting the Wonderful World of Motherhood. Sorry your stay was so short. We hope you can join us again!

Because you know, I didn't really have a baby. And I didn't buy a crib or a stroller or diapers or wipes or clothes or a car seat like everyone else.

Or burial plots or a coffin or a headstone.

This is not about money. I could care less about the money. I would have loved it if the government had taken that money and used it for stillbirth research. What are the chances of that happening?

A few year ago, I was reading the Arizona individual income tax return filing instructions and I came across a paragraph that caused my to catch my breath. I couldn't believe what I was reading under who you can list as a dependent.

"A stillborn child if the following apply:
  1. The stillbirth occurred during 20XX.
  2. You received a certificate of birth resulting in stillbirth from the Arizona Department of Health Services.
  3. The child would have otherwise been a member of your household."
Thank you, Arizona!

I researched on the internet and it appears that there are a tiny handful of other states allowing a deduction or credit as well. Indiana, Missouri, Alaska and Michigan.

I found the arguments for and against the Michigan bill quite interesting so I have cut and paste them here.

For:

The bill would allow a personal exemption for a stillborn child. Proponents of this deduction say that a child born alive qualifies as an exemption even if he or she takes only a few breaths, yet the parent or parents of a stillborn child cannot claim a tax exemption. This is unjust, and the lack of recognition of the existence of the child adds to the anguish. The expense of preparing for the arrival of a stillborn child is the same as for a child born alive. The exemption, obviously, would only be claimed for the tax year in which the stillbirth occurred, so it is a one-time exemption or deduction. (The bill would make use of a form that is already required in reporting the death of a fetus that has completed at least 20 weeks of gestation.)

Against:

Is the Income Tax Act the proper place to address the tragedy of a stillbirth? Generally, state tax officials prefer changes in the tax law that will either encourage simplicity or that will provide a clear set of incentives. This bill would not accomplish either goal. Further, there may be administrative problems, in that the form used by the Department of Community Health (known as "the final disposition of a stillbirth") may not be adequate for tax purposes. (It should also be noted, for what it is worth, that the federal income tax law does not allow a deduction in the case of a stillbirth.)


It's obvious which side I am on but I do have to say that the Against arguments are a bit pathetic. That last sentence is laughable because states veer from federal laws all the time. For what it is worth, I can think of three different deductions on the Massachusetts individual income tax return that are not allowed for federal purposes. For what it is worth.

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Approximately 26,000 stillbirths occur in the United States each year. For more than half, the reasons cannot be identified.

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ETA: I don't know why the fonts are different sizes. I reset those sentences to normal but they are still publishing bigger.

9 comments:

Wiley said...

Wow, I'm not directly a tax person, but as an actuary I am pretty tax-aware and somehow I didn't think about this. I think mainly because of the whole being in the wrong year anyway. I did make the joke prior to the delivery that the deduction wouldn't offset the second annual out of pocket, so I was at least sort of tax aware.

I really like the argument about preparing for a child and the expense. While it's the validation that the stillborn child was real that would mean the most to me, it's this objective argument that stands out to me.

Wow.

Hope's Mama said...

Our system is so much different to yours and thankfully our country does seem a bit more progressive. We get a birth certificate, just like everyone else, though the word "stillborn" does appear at the top, just to make it clear. Otherwise, it is exactly the same document. However, I do find it odd I got no death certificate. As she did die. She's not here. But that's not really a complaint as such, just all part of this weird, confusing and alienating experience.
In Australia, we get what is called the "Baby Bonus" when we have a child, a one off payment of about $5000. I just naturally assumed that once Hope was stillborn, we'd miss out on this payment, but thankfully our government has a heart, and we still got it - not to mention a very heartfelt letter that came after we got that payment, that didn't sound anything like you'd expect to receive from the government at all. The money meant little to us, but like you say, we still had all the same pre-parenthood expenses as everyone else, not to mention a funeral to arrange and pay for in the days after she died, so it was very much appreciated and needed.
Simple things like this, at least in my country, do help to make me feel as if she counted, she mattered and that I don't have to hide her away. But as a whole, in all parts of the world, we still have such a long way to go. For example, if she lived, even if she was born at 20 weeks and took one breath, we'd be able to get an inquest in to her death (due to the questionable care we got in those last few days). But because she was stillborn, she doesn't count. Just goes down in the record books as a failed pregnancy, and we left feeling confused, bereft, empty arms with a general message of "better luck next time". Not good enough. Not in a million years.
xo

Chantel said...

Exactly. Exactly. I have raged about this same topic before. but I love the technical side you can present. I knew Michigan offered a small tax deduction, but didn't know about the other states.

I was happy to find out MN offered a Birth Certificate resulting in Stillbirth in MN. There were a lot of people in MN who fought for that for me...before I ever was pregnant with Curtis.

Amy said...

Alaska had a bill to issue stillbirth certificates in the making when I delivered. I read about it afterward and cried, and then wrote a letter to the sponsor thanking him, and to one of the two who voted against it yelling.

I can't imagine why Alaska would allow the dependent exemption, we don't have a state income tax. Maybe it's ceremonial? I do remember filing my income taxes the year after I delivered, and just reading and re-reading the dependent definitions on Turbo Tax - "You cannot claim a stillborn child." Over and over.

Becky said...

Wow, what a great post. I am not exactly a tax person, and might have looked into this for next tax season, but had wondered if I would be able claim Liam at all on taxes next year. I was not aware that Alaska allowed that, now I need to to read more into it.

Liam was born in California, even though we are Alaskan residents, and was happy to hear that they had the certificate of stillbirth-speaking of which mine should be in the mail by now I applied for it a month and a half ago.

Wiley said...

This raised another question in my mind when I thought about it some more, is there an official cutoff between miscarriage and stillbirth? And is it based on when the demise happens or when the baby is delivered?

I'd hate to come up with where the line is drawn and so I'm wondering if that's part of the reason for requiring alive at birth? But saying a twenty weeker born breathing is more or less a child than a forty weeker born still seems hard for me to do as well.

Our daughter died at 24 weeks, but wasn't born until a day short of 30 because she was a twin. I count her as a child, but I can kind of understand her not counting for IRS purposes. This is one end of the spectrum. At the other is the full term baby who dies during the delivery process. I have a lot more trouble with excluding this baby.

Anyone else know anything more about how this is handled in more countries?

Meg said...

Political policies boggle my mind. I can't comment personally on this topic, but as an observer it drives me nuts. Stillborn or not, she was still born. It's not like she disappeared into thin air. {I do not understand the way this world works sometimes.}

On the subject of reporting money from sponsors (for blogs)... I never thought of that! Does this mean we also need to report earnings from garage sales or other little things we may have "earned" money on? Does that count?

Sarah said...

Sally - thank you for sharing what it is like in your country. It amazes me how different countries can be. And you most certainly deserve an inquest.

Amy & Becky - I pulled those states from a list. I had forgotten that Alaska doesn't have a state income tax. Under Alaska, the link was broken so I'm not sure exactly what the deduction is. I wish I had had some time to research it before I posted.

Wiley - I believe each state decides the difference between miscarriage and stillbirth. From what I have seen, it is pretty much the same across the US. The difference is 20 weeks and the baby has to weigh a certain amount. I think that is to mark the difference in a baby, who may have passed away at 15 weeks but wasn't delivered until 20 weeks.

Meg - Garage sale earnings are different b/c you have a cost for those items and you are selling them at a loss. (Those losses are not deductible btw.)

MissBean_WillowTree said...

I was going to say exactly what Hope Mama's said about the baby bonus here in Aus being available to parents of stillbirths, as will as live births and adoptive parents... here are some extracts from different sites, in case you're interested.

"Eligibility for Baby Bonus
Baby Bonus is payable to:
* A parent of a baby if the parent meets all other eligibility criteria at any time within 13 weeks of the baby's birth; or
* A parent of a stillborn baby if the parent would have met all the other criteria if the baby had not been stillborn;
from http://www.babybonus.com.au/australian-baby-bonus-t16.html

another one on the law:
http://www.facsia.gov.au/guides_acts/fag/faguide-2/faguide-2.4/faguide-2.4.1.html

"Women who have stillborn children can receive the bonus on compassionate grounds.
According to the Parliamentary Library, the definition of a stillborn child in the Family Assistance Act is one who weighs at least 400g at delivery or whose period of gestation was at least 20 weeks; who has not breathed since delivery; and whose heart has not beaten since delivery.

from http://www.news.com.au/national/call-for-inquiry-on-baby-bonus-abortion-loophole/story-e6frfkvr-1225854887365


If you deliver before 20 weeks or 400g you can apply for a "Commemorative Certificate for Early Pregnancy Loss."
http://www.nt.gov.au/justice/bdm/documents/bdm/app_commerative_cert_delivery.pdf

I can't find out online what happens with a still birth in regards to the certs issued.