Friday, February 17, 2012

Adoption Credit

I never thought that I would be excited to file my taxes.  Well this year...YIPPEE!  We are expecting a big fat refund for Elise's adoption last year.  Yes, to the tune of $13,360!!  The IRS is offsetting our $30K of Elise's adoption expenses (includes all agency, paperwork, and travel costs), by giving us a clear refund of $13,360.  We will of course be using the refund to travel for Ian.

This refund is what has helped make all of our adoptions affordable.  Unfortunately, this adoption credit is due to expire at the end of this year unless something changes.  Here is a brief explanation:

2012 — The tax credit will be $12,650 per child. Families who adopt children with special needs will be able to claim the full credit regardless of their qualified adoption expenses. Other adopters will have to have qualified adoption expenses.

The credit will NOT be refundable, meaning that families can benefit only if they have federal income tax liability. Just as before 2010, families will claim the credit with their 2012 taxes, use what they can that year, and then can carry any remaining credit forward for five additional years until the credit is used up or time runs out.

2013 — Only families who adopt special needs children from foster care will be eligible for up to $6,000 in the adoption tax credit.

So we are hopeful that something will be done to extend the credit; however, I fear that with the congress budget cuts it will not be :(  This adoption credit is what makes the process affordable to most families.  Investing $30K to bring a child home to a safe forever family is still worth it, but it does help tremendously to cut that number almost in half when you factor in your IRS refund.  I pray they will continue the credit in some form or fashion.

No comments: