A network of adoptive families, birth families, and adoption professionals which exists to improve the lives of children and others touched by adoption through support and education. UFA is actively engaged in community outreach and advocacy to raise awareness of adoption as a loving option.

Saturday, January 5, 2013

Adoption Tax Credit Made Permanent

A message from the North American Council on Adoptable Children

The legislation to avoid the fiscal cliff (the American Taxpayer Relief Act of 2012, signed into law on January 2) included a provision that made the adoption tax credit permanent. Unfortunately it did not make the adoption credit refundable, so it will only benefit those adoptive families who have federal income tax liability.

For 2013, we believe the maximum adoption credit and exclusion will be slightly higher than the 2012 maximum of $12,650. The credit will begin to phase out for families with modified adjusted gross incomes above a certain level (around $190,000) and the credit will go away completely for those with incomes around $230,000. (Exact numbers for the maximum credit and income guidelines have yet to be released.)
image by Arvind Balaraman
For 2013 and beyond, the credit will remain flat for special needs adoptions, meaning that those who adopt children from the U.S. who receive adoption assistance/adoption subsidy benefits can claim the maximum credit regardless of their expenses. For other adoptions (except for step-parent adoptions), parents can claim the credit based on their qualified adoption expenses.

NACAC is deeply disappointed Congress did not make the adoption tax credit refundable for 2012 or future years, and will continue to advocate for refundability in the future. We will keep you posted on these advocacy efforts.

Even though the credit isn't refundable for 2012, we encourage those who adopted in 2012 to submit a Form 8839 with their 2012 taxes even if they do not have tax liability. Although they will not receive an adoption credit refund with their 2012 taxes, the credit can be carried forward up to five additional years. Families might benefit later if either their tax situation changes or the credit is made refundable in the future, and then wouldn't have to amend their 2012 taxes.

From the National Council For Adoption:

Complete details of implementation are still to be seen, but the bill permanently extends the adoption tax credit which is set at $10,000, but may once again be scaled for inflation, potentially bringing it to near the 2012 amount of $12,650. Families with incomes under $150,000 will receive the full credit and it will gradually phase out for higher incomes.

“Congress is to be commended for remembering children and families as a priority. The adoption tax credit is an important layer of support for families who adopt. The credit helps ensure children find their way to safe, stable, loving, and permanent families” says Megan Lindsey of National Council For Adoption. “We are grateful to Congress, the Obama administration, and our many partnering advocates in the Save the Adoption Tax Credit Working Group for their tireless efforts on behalf of this important credit.”

The complete language of the American Taxpayer Relief Act is available here.


No comments:

Post a Comment

Thank you for taking time to comment on this post.
Your comment will be published after it is approved.

Google Analytics

ShareThis

LinkWithin

Related Posts Plugin for WordPress, Blogger...