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Filing Taxes – Adoption Tax Credit

The purpose of this article is to increase the awareness of those who adopt children to the tax credit contained in The American Taxpayer Relief Act of 2012 (H.R.8) enacted on January 2, 2013. The IRS indicates that this law applies to tax years beginning on or after January 1, 2013. Since I am not an expert on tax law and the circumstances of each person is different, your tax advisor is the proper person to help you decide whether you qualify for the benefits of the Adoption Tax Credit.

The IRS Definition of the Adoption Tax Credit.

In simple terms:

The adoption tax credit offsets qualified adoption expenses, making adoption possible for some families who could not otherwise afford it. Taxpayers who adopt an eligible child may qualify for an adoption tax credit.

Tax Credit No Longer Refundable

At one point the law permitted taxpayers to get a refund from the government for qualified adoption expenses, but for tax years beginning after December 31, 2011 the adoption credit is apparently non-refundable. However, unused credits carry forward on later tax returns for up to five tax years. This could be very beneficial for those meeting the legal requirements since according to the IRS it could amount to a non-refundable credit as high as $12,970 for year 2013 tax returns.

Efforts of Foster Parents To Make The Current Non-Refundable Adoption Credit Refundable

My contact with foster parents in central Florida indicates that they are asking for the support of legislators, relevant national organizations and all others interested in re-establishing a refundable adoption credit for taxpayers. This could greatly ease the financial burden experienced by adopting parents. To advocate for this change effectively such highly localized efforts need help in becoming a well-coordinated national movement.


Those in the United States who plan to adopt children or have recently completed the process of adopting a child should consult their tax advisor to make sure that they are properly informed of the adoption credit provision. It could help solve the financial concerns they experience when adopting a child. It may also be possible for eligible taxpayers to amend earlier federal tax returns to take advantage of previously overlooked benefits.

Taxpayers seeking the passage of a refundable adoption credit need the support of organizations and others advocating adoption of children. There are many national organizations in place that are capable of helping.

Since the law was recently revised it will likely be quite difficult to get the U.S. Congress to consider revising it again this soon. If at first you don’t succeed, try again. You haven’t lost until you stop trying.

© 2013 Douglas M Midgley, JD All Rights Reserved Worldwide

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