Sunday, January 8, 2012

Adoption Tax Credit in 2012 . . . And Beyond

I’ve been eager to learn what will become of the Adoption Tax Credit in coming years- especially since we were not able to adopt in 2011 and thus were not eligible for the fully REFUNDABLE $13,000 tax credit which would have been extremely helpful in offsetting the costs to adopt!   [The "average" cost of adopting domestically can run anywhere from $25 -$35K.]
The National Council for Adoption addressed the issue of legislation related to the Adoption Tax Credit in a recent Adoption Advocate HERE.  Then, this morning I came across a well-written post on the subject courtesy of Foster Care: Our Love Story, which I am reposting with permission now:

Adoption Tax Credit

There is a tax credit available for people who adopt. It is intended to offset the cost of traditional adoption and provide incentive for perspective parents to adopt special needs children from Foster Care.

When adopting from foster care, almost all of our kids qualify as "special needs". Some of the qualifications for that are sibling groups, minority children, a child that has been in care over 1yr, or children with medical or developmental disabilities. If you adopt a special needs child, you are eligible for the entire adoption tax credit.

In years past, this credit could be used against your income tax. So you would get a bigger return, but the benefit was linked to your income and how much you pay in taxes. So for Middle class families, it could take years before you saw the full benefit of the tax credit. If you were a Grandma on Social Security who adopted 3 of your Grandbabies, you would never see this money because you don't owe taxes.

In 2010, however, President Obama signed the Patient Protection and Affordable Care Act which had some small print that made this Adoption Tax Credit a refund. This means that for every child adopted from foster care through 2011, their adoptive parents would a receive a $13,170 check regardless of their income or taxes owed. This was great news for people who got to adopt in these past 2 yrs. Granny gets the money she needs to move to a bigger apartment or start college fund for her kids.

Unfortunately, this refundable credit went away on December 31, 2011.

The plan for people adopting in 2012 is that you can get credit up to $12,170 for each adoption against your income tax. However, the remaining amount can not be used in following years. You'll get a bigger tax return for this year, but not the check for the credit amount and there is no benefit beyond 2012.

In 2013, the Adoption Tax Credit goes away all together.

There is a petition going around to try to get the Tax Credit extended. I signed it, and I hope you will too. The financial incentive shouldn't be the reason people adopt, but hopefully it helps keep siblings together or keep higher needs kids in stable homes.

Click here to sign the Adoption Tax Credit Petition

This is a form letter you can send to your State representative


Shine said...

May I re-post this Mary?

Mary said...

Spread the word- credit goes to Foster Care: Our Love Story!

acceptance with joy said...

so, are you saying because we adopted the twins in April of 2011 we should be able to get a $13,000 check at income tax time?

Mary said...

For info on eligibility requirements for the adoption tax credit refer to I would contact an accountant or tax lawyer right away to see if you qualify for $26,000 for adopting twins!

Maura said...

We are finalizing both of our adoptions in February 2012. We missed the refund by two months:( But it was such a headache last year with our taxes because of the refund we were almost glad not to have to spend the next 8 or so months on the phone with the IRS.

Mary said...

Maura- BOTH of your adoptions? I need to catch up on your blog! Congratulations- I know it's been a long process with Mia.

Sandy said...

Thank you for the information. I just signed, I can't believe they would take this away.

Unknown said...

It's good that there are tax credits supporting parents who adopt children with special needs. That is one way of rewarding them for having a kind heart and the desire to give these children a better life. That is truly a kindhearted measure for kindhearted people.

Dana Samuelson