Families In Homeless Shelters Increased 7% In '09

From USAToday.com:

The recession continued to take its toll as more families with children became homeless for the second straight year, a U.S. government report shows.

The number of families in homeless shelters increased 7% to 170,129 from fiscal year 2008 through fiscal year 2009, a report released today by the U.S. Department of Housing and Urban Development found. At the same time, the overall number of homeless people in shelters fell 2% to 1.56 million.

"As the nation's housing and job markets show encouraging signs of recovery, there are still far too many families who are on the brink of becoming homeless or have fallen into our shelter system," Secretary Shaun Donovan said in a statement.

The annual report counted the homeless in two ways. The first was a census in cities and counties, where volunteers fanned out one night during the last week in January to count those living on streets and in shelters. That count found 643,000 people were homeless. The chronically homeless dropped 10% from 2008 to 111,000.

That decline stems from more local and federal efforts to find the chronically homeless permanent housing and social services, said Nan Roman of the National Alliance to End Homelessness.

The second method of counting involved a year-long study of shelter data in 334 communities. It found more families in shelters rented or lived with family before becoming homeless. Families also are staying longer in shelters, from 30 days in 2008 to 36 in 2009.

Tax Incentives to Adopt a Child

Most Americans know about the tax benefits of having children, but you might be surprised to learn that there are actually decent tax incentives to adopt children. The RDTC Tax Help Blog posted a blog entry last week explaining the tax laws surrounding adoption. You can find a segment of the article below or find the full text at the RDTC Tax Help Blog.

The Basics

There are two main tax incentives for families that adopt, an exclusion and a credit. Taxpayers can take advantage of the credit and exclusion for the expenses of adopting an eligible child. Meaning, you may be able to exclude up to $12,170 (or whatever the limit is for the tax year) from your income, and claim a credit for the same amount. However, you cannot claim both the credit and exclusion for the same expenses.

Credit Amounts

The value of the credit for the past few years is listed below. It is important to note that the credit was expanded in 2001 as part of the Economic Growth and Tax Relief Reconciliation Act of 2001, which is due to expire at the end of 2010. Unless Congress extends the package the value of the credit will be reduced by at least 50%.

2011: $6,000 or less

2010: $12,170

2009: $12,150

2008: $11,650

2007: $11,390

2006: $10,960

Income Phase Outs

As with most federal tax credits and deductions, the value of the adoption credit phases out when your income reaches a certain level. The phase out ranges are listed below for the past few tax years. The IRS also provides a worksheet for figuring out your credit value in the Instructions for Form 8839.

2010: $182,520 - $222,520

2009: $182,180 - $222,180

2008: $174,730 - $214,730

2007: $170,820 - $210,820

2006: $164,410 - $204,410

Obama's Tax on Work

The Wall Street Journal recently posted an interesting article on how Obama’s healthcare bill could affect marginal tax rates, and in turn, the taxation of work. Many claim that these changes could result in higher taxes for middle-income American families. I’ve included a clip of the article below.

None of the new distortions that the Senate health-care bill will layer onto the already-distorted tax code have received the attention they deserve, but in particular its effects on marginal tax rates could use scrutiny. Incredibly, for those with lower incomes, ObamaCare will impose a penalty as high as 34% on . . . work.

Central to Max Baucus's plan—assuming the public option stays dead—is an insurance "exchange," through which individuals and families could choose from a menu of standardized policies offered at heavily subsidized rates, provided that their employers do not offer coverage. The subsidies are distributed on a sliding scale based on income, and according to the Congressional Budget Office, 23 million people will participate a decade from now, at a cost to taxpayers of some $461 billion.

Think about a family of four earning $42,000 in 2016, which is between 150% and 200% of the federal poverty level. CBO says a mid-level "silver" plan will cost about $14,700 in premiums, of which the family will pay $2,600—since the government would pay the other $12,100. If the family breadwinner (or breadwinners, because the subsidies are based on combined gross income) then gets a raise or works overtime and wages rise to $54,000, the subsidy drops to $9,900. That amounts to an implicit 34% tax on each additional dollar of income.

Or consider a single worker earning $20,600 and buying an individual "silver" policy with a premium at $5,000. Again according to CBO, if his income rises to $26,500, his subsidy plummets to $2,700 from $4,400 (including a cost-sharing subsidy that goes away). This is a 29% marginal tax; moving to other income levels yields increases in the neighborhood of 20% to 23% for both individuals and families. Jim Capretta, a fellow at the Ethics and Public Policy Center, calculates that when combined with other policies like the Earned Income Tax Credit that also phase out, the effective marginal rate would rise to nearly 70% at twice the poverty level.