On January 1, 2013, Congress passed the American Taxpayer Relief Act of 2012 (H.R. 8). Amongst the provisions of this Act was an extension of the adoption tax credit in which President Obama signed into law Wednesday, January 2, 2013.
The adoption tax credit, which can be claimed for eligible adoption-related expenses, has helped thousands of American families offset the high cost of adoption since the credit was established in 1997. It has made adoption a financially viable option for many parents who might not otherwise have been able to afford adoption, allowing them to provide children with loving, permanent families. With over 100,000 children in the U.S. foster care system currently eligible for adoption, and an ever increasing number of orphaned and abandoned children worldwide languishing in institutions, the continuation of the adoption tax credit is vital to providing love, safety, and permanency through adoption to as many children as possible.
posted February 21, 2012
Many taxpayers claiming the expanded adoption credit are slowing down their refund by not attaching required documents to their tax returns. Ensure you know what you need to do to get the Adoption Tax Credit to which you are entitled. To find out more on requirements and other important information go to www.irs.gov, key word "Adoption Credit."
The Affordable Care Act raised the maximum adoption credit to $13,360 per child for tax year 2011. The credit is refundable; you may be eligible even if no tax is owed for the year.
The Adoption Tax Credit is based on reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. The amount of the credit could be limited by your client's income.
In addition to filling out Form 8839, Qualified Adoption Expenses, eligible taxpayers must include with their 2011 tax returns one or more adoption-related documents. Use this chart or refer to the Instructions for Form 8839 for a list of acceptable documents. This documentation requirement, designed to ensure that taxpayers properly claim the credit, means taxpayers claiming the credit will have to file paper tax returns.
If you adopted a child with special needs, you may qualify for the full amount of the Adoption Tax Credit even if you paid few or no adoption-related expenses. If claiming the credit for a special needs final adoption, you only needsto submit the final adoption order or decree and the state’s determination of special needs or subsidy agreement.
It could take up to three weeks to get a refund, even with proper documentation attached to the return.
Families claiming the credit can still use IRS Free File to prepare their 2011 tax return and Form 8839, but the tax return and Form 8839 must be printed and mailed to the IRS, along with all adoption credit-related documents.
For 33 years, NCFA has been the authoritative voice for adoption. Our research and education programs have led the way in promoting sound, ethical adoption policies and practices that have enabled children to find nurturing, permanent families through adoption.
America's Christian Credit Union (ACCU) believes every child deserves a forever family. Their adoption loan program has helped place over 700 children in loving homes. In addition to adoption loans, ACCU provides effective banking solutions to individuals and ministries that empower them to reach their financial goals while expanding God's Kingdom. Click here to read more >>