IRS Issues 2013 Adoption And Transportation Benefit COLAs

In Rev. Proc. 2013-15, the Internal Revenue Service has issued the latest cost-of-living adjustments (COLAs) for adoption assistance and transportation.

Adoption assistance. For taxable years beginning in 2013, the credit allowed for the adoption of a child, under Code Sec. 23(a)(3), including a child with special needs, is $12,970, and, for adoption assistance programs, under Code Sec. 137(a)(2), the amount that can be excluded from an employee’s gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses pursuant to an adoption assistance program is also $12,970.

The American Taxpayer Relief Act extended permanently enhancements to the adoption credit and the income exclusion for employer-paid or reimbursed adoption expenses up to $10,000 (as indexed for inflation above). The adoption credit and income exclusion phase out for taxpayers above specified inflation-adjusted levels of modified gross income. The phase-out level for 2012 started at $189,710 and, for 2013, it begins to phase out for taxpayers with modified adjusted gross income over $194,580. It is completely phased out for taxpayers with modified adjusted gross income of $234,580 or more.

Transportation COLAs. The American Taxpayer Relief Act also extends parity in transit benefits through Dec. 31, 2013. Therefore, for 2013, the monthly limitation under Code Sec. 132(f)(2)(A) for both the aggregate fringe benefit exclusion amount for transportation in a commuter highway and any transit pass, which is $245, is the same as the fringe benefit exclusion amount under Code Sec. 132(f)(2)(B) for qualified parking. For taxable years beginning in 2012, both amounts were $240.

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