The adoption tax credit helps tens of thousands of children every year find a permanent, loving family. By refunding some of the adoption expenses families pay, it makes international and domestics adoptions more affordable, ensuring that more children have the opportunity to have a family and that families at all income levels can offer children a loving home. The cost of an adoption should not be a barrier that prevents children finding loving families.
In the case of adoption of children with special needs (primarily adoptions from foster care), the adoption tax credit is an incentive to encourage families to adopt children who might otherwise spend their lives in foster care. These children are almost always children who are older, who are waiting to be adopted with their brothers or sisters, or who have a disability.
Bottom line, the adoption tax credit makes adoption more possible for the more than 100,000 children in U.S. foster care, and the millions of children worldwide who need a family of their own.
With more than 150,000 children still waiting in the U.S. foster care system for forever homes, with the growing number of children worldwide who are homeless, and with the large number of U.S. birth mothers looking for a secure future for their children, the work of the adoption tax credit is not done.
What is the current status of the adoption tax credit?
For calendar year 2012, the adoption tax credit has a maximum credit of $12,650 (less than in 2010 or 2011). It applies to all types of adoption—from foster care, internationally, or privately from the U.S.—other than stepparent adoptions. The current adoption tax credit is set to expire, or “sunset” on December 31, 2012. As of January 1, 2013, the adoption tax credit as we know it will be gone; the benefit that will remain will be greatly reduced and restrictive.
Although the adoption tax credit was refundable for tax years 2010 and 2011, it is not refundable for 2012. This means that only families who have tax liability (meaning they pay federal income tax) will be able to benefit. Many families started the adoption process in 2011 or even earlier thinking they would be able to claim the benefit, but because of court or other delays may not get the support they need.
Is the adoption tax credit going to end after 2012?
The adoption tax credit will not go away completely, but after December 31, 2012, it will be a $6,000 nonrefundable credit for authorized expenses for special needs adoptions only. This will help very few adoptive families and vulnerable children.
On April 17, Representative Bruce Braley introduced the Making Adoption Affordable Act (HR 4373). When contacting your representative’s office, ask your representative to become a co-sponsor of HR 4373. There is no companion legislation in the Senate yet, so you can simply ask your senators to support an adoption tax credit that is inclusive, refundable, flat for special needs adoptions, and permanent.
For more information, check out the progress of the bill on GovTrack.us at: http://www.govtrack.us/congress/bills/112/hr4373
For information relating to this tax credit, check out: http://adoptiontaxcredit.org/