Filing Taxes – Adoption Tax Credit

Filing Taxes – Adoption Tax Credit

The purpose of this article is to raise awareness among those who adopt children of the tax credit contained in the American Taxpayer Relief Act of 2012 (HR8), enacted on January 2, 2013. The IRS states that this Act applies to tax years beginning on or after 1 January 2013. As I am not a tax law expert and everyone’s circumstances are different, your tax advisor is the right person to help you decide whether you are eligible for the benefits of the adoption tax credit.

The IRS definition of the adoption tax credit.

In simple words:

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

Tax credit is no longer refundable

At one point, the law allowed taxpayers to get a government refund for qualified adoption expenses, but for tax years beginning after December 31, 2011, the adoption credit is apparently not refundable. However, unused credits carry over to later tax returns for up to five tax years. This can be very helpful for those who meet the statutory requirements, as according to the IRS it can amount to a non-refundable credit of up to $12,970 on 2013 tax returns.

Foster parents’ efforts to make the current nonrefundable 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 anyone else interested in re-establishing a refundable adoption credit for taxpayers. This could greatly ease the financial burden on adoptive parents. To effectively advocate for this change, such highly localized efforts need help to become a well-coordinated national movement.


Those in the United States who are planning to adopt children or have recently completed the process of adopting a child should consult with their tax advisor to ensure that they are properly informed about the adoption credit provision. This can help solve the financial problems they experience when adopting a child. It is also possible for eligible taxpayers to amend earlier federal tax returns to take advantage of previously overlooked benefits.

Taxpayers who want to receive a refundable adoption credit need the support of organizations and others who advocate for child adoption. There are many national organizations that are able to help.

Since the law was recently revised, it will likely be quite difficult to get the US Congress to consider revising it again so 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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