Where to Start for Information on the Federal Adoption Tax Credit:
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General Information/Educational Resources on the Federal Adoption Tax Credit:
- Becky Wilmoth of Bills Tax Service of Centralia LLC has put together a great overview of the adoption tax credit, and what documentation is needed to claim it.
- Adoption Tax Credit Working Group has a really terrific FAQ page on what we can do to help renew this credit.
- Washington adoption attorney Mark Demaray discusses the delays in processing the adoption tax credit for 2010 filed in 2011. He also provides information on what adoptive parents can do to reduce delays for the 2011 adoption tax credit filed in 2012.
- The Creating a Family Adoption Tax Expert, Nicole Albrecht, provided this great summary of the past, present (2012), and future (2013) of the Adoption Tax Credit. (Check with your tax preparer about the specifics of your situation.)
- 2013: $5,000 or $6,000 for a special needs child (projected)
- 2012: at least $12,170 (will be indexed for inflation), non-refundable
- 2011: $13,360, refundable
- 2010: $13,170, refundable
- 2009: $12,150, non-refundable
- 2008: $11,650, non-refundable
- 2007: $11,390, non-refundable
- 2006: $10,960, non-refundable
- The IRS.gov provides the following informational resources:
- The IRS is struggling with the Adoption Tax Credit as many of the Creating a Family community have found out first hand. Information on what is happening with the Adoption Tax Credit and why it is happening can be found in the HEARING BEFORE THE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON OVERSIGHT U.S. HOUSE OF REPRESENTATIVES “Improper Payments in the Administration of Refundable Tax Credits” (pages 8 and 9). As of the end of April 2011, the IRS has received 72,656 individual claims for more than $897 million in Adoption Credits. Of these, 58 percent either had no required documentation or thedocumentation was invalid or insufficient. The IRS estimates that an individual would receive notification that documentation is needed to support eligibility for claiming the Adoption Credit within 3-4 weeks after tax return is received in the Examination function. The individual then has 30 days to respond to the IRS's request for required documentation. Once the IRS receives the information, the IRS does not have a specific time goal for closing the case subsequent to receipt of the information. For more info go to the report itself, or to this article summarizing this report.
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"Federal Tax Benefits for Foster, Adoptive Parents and Kinship Caregivers" is an online booklet published by the National Foster Parent Association
- Nice postcard-sized sheet with basic summary information on the Adoption Tax Credit.
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A good explanation on who is eligible for the Federal Adoption Tax Credit and how to apply can be found in this three part article. Part 1 Part 2 Part 3
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Adoption Learning Partners has an online course titled Understanding the Adoption Tax Credit. There is no fee unless you want a certificate of completion.
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Watch this video to learn more about the adoption tax credit for 2010.
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Good summary of changes made in 2010
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Claiming the Federal Adoption Tax Credit for Special Needs Adoptions
- Adoption Tax Credit Extended until Dec. 2012. On December 17th, 2010 President Obama signed the 2010 Tax Relief Act. Included in this massive package of income tax, estate tax and unemployment provisions was one little provision that will make adoptive families very happy – extending the adoption tax credit through Dec, 31, 2012. Prior to the signing of this bill, the Adoption Tax Credit was due to expire (or in legal terms “sunset”) on Dec. 31, 2011. The credit is up to $13,170 in 2011 and $12,170 in 2012. Although there is a bit of confusion surrounding this extension, it appears that the “refundability” aspect of the tax credit is not extended for 2012. As it stands now, it looks like the adoption tax credit is refundable for 2011, but not for 2012. For more details on what this means and on the Adoption Tax Credit in general, go to our podcast on the Adoption Tax Credit on Dec. 1, 2010.
The full text of the law can be found in Section 101 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
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List of local IRS offices with information on the federal adoption tax credit. Includes contact information.
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National Council for Adoption article on TAX BENEFITS FOR ADOPTION: The Adoption Tax Credit
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Tax Benefits for Adoption: The adoption tax credit - Good summary from Adoptions From the Heart of the Federal Tax Credit, including a good history of this tax credit.
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IRS Adoption Tax Benefits FAQ page. Also good information on the instructions to IRS Form 8839, Qualified Adoption Expenses, which can be downloaded from the website or ordered by calling 800-TAX-FORM (800-829-3676).
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Video from the Dave Thomas Foundation on Adoption Tax Credit: For Families
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Good paper summarizing this all important adoption tax credit by adoption attorney Mark McDermott. "Adoption Tax Credit is alive and well."
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National Council For Adoption compiled some great information in an easy to read format in their Adoption Tax Credit Advocacy Kit
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Other Tax Benefits:
Remember that you will receive tax benefits in the future unrelated to adoption since you can claim this child as a dependent and can also get the child tax credit. Further, you should ask your tax professional about ways to utilize the child care credit and the medical credit.
- Tax Benefits for Special Needs Adoption
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The federal government has a program administered by the states to reimburse families for the cost of adopting children with special needs. The program is primarily aimed for families who adopt children from the foster care system, but some states also offer this reimbursement to families adopting special needs kids internationally. Each state has their own rules about when a family must apply, so contact your state early in the adoption process. The North American Council on Adoptable Children has a good summary of each state’s position on this reimbursement. (www.nacac.org, click on Adoption Subsidies, click on Fact Sheet, and click on International Adoption Subsidies). They also list the contact person for each state to call for information.
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The IRS Adoption Tax Credit and Special Needs Adoption Information
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National Council for Adoption article on TAX BENEFITS FOR ADOPTION: The Adoption Tax Credit has a section on Tax Benefits for Adoption Children with Special Needs and disabilities
- Tax Benefits for Adopting Kids from Foster Care
- State Adoption Tax Benefits
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Many states also provide tax benefits for domestic adoption, foster care adoption, international adoption, and special needs adoption. Talk with your tax preparer and the tax office in your state to see if you are eligible for these adoption tax credits, deductions, or other benefits.
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List of contact information for tax offices in each state.
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The Child Welfare Information Gateway has a list of who to contact in each state to ask questions concerning adoption. It is not specifically a list for adoption tax benefit questions, but they may know of state specific adoption tax deductions or credits.
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Income taxes are individual and complex. The information provided here is not a substitute for professional financial advice and should not be relied upon without consulting your tax advisor.
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