Filing Taxes – Adoption Tax Credit


The purpose of this article is to educate those who adopt children of the tax credit contained in the American Taxpayer Relief Act of 2012 (HR8) promulgated on January 2, 2013. The IRS states that this law applies to taxation years beginning on or after January 1, 2013. Since I am not an expert in tax law and each person's situation is different, your tax advisor is the appropriate person to help you decide if you are eligible for the benefits of the adoption tax credit.

The IRS definition of the adoption tax credit.

In simple terms:

The adoption tax credit offsets eligible adoption expenses, making adoption possible for some families who might not otherwise be able to afford it. Taxpayers who adopt an eligible child may be eligible for an adoption tax credit.

The tax credit is no longer refundable

At one point, the law allowed taxpayers to obtain a reimbursement from the government for eligible adoption expenses, but for taxation years starting after December 31, 2011, the adoption credit is apparently not refundable. However, unused credits are carried over to subsequent income tax returns up to five tax years. This could be very beneficial for those who meet the legal requirements, because according to the IRS, this could amount to a non-refundable credit of up to $ 12,970 for the 2013 income tax returns.

Efforts of foster parents to make the current non-refundable adoption credit refundable

My contacts with foster parents in central Florida indicate that they are asking for support from legislators, relevant national organizations and everyone else interested in restoring a refundable adoption credit for taxpayers. This could greatly ease the financial burden for adoptive parents. To effectively advocate for this change, these highly localized efforts need help to become a well-coordinated national movement.


In the United States, those who are considering adopting children or who have recently completed the process of adopting a child should consult their tax advisor to make sure that they are duly informed of the provision relating to the adoption credit. This could help to solve the financial problems encountered when adopting a child. It may also be possible for eligible taxpayers to modify previous federal tax returns to take advantage of previously overlooked benefits.

Taxpayers who request the passage of a refundable credit for adoption need the support of organizations and others advocating the 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 US Congress to consider revising it again soon. If at first you don't succeed, try again. You haven't lost anything until you stop trying.

© 2013 Douglas M Midgley, JD All rights reserved worldwide

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