2009 Adoption Tax Credit
In October, the adoption tax credit was reviewed and the following changes were made:
“.03 Adoption Credit. For taxable years beginning in 2009, under § 23(a)(3) the credit
allowed for an adoption of a child with special needs is $12,150. For taxable years
beginning in 2009, under § 23(b)(1) the maximum credit allowed for other adoptions is
the amount of qualified adoption expenses up to $12,150. The available adoption credit
begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross
income in excess of $182,180 and is completely phased out for taxpayers with modified
adjusted gross income of $222,180 or more. (See section 3.14 of this revenue
procedure for the adjusted items relating to adoption assistance programs.) “
http://www.irs.gov/pub/irs-drop/rp-08-66.pdf
The tax credit amount for 2008 was $11,650, so that equals a $400.00 raise in credit! Great news for all adoptions finalizing in 2009.
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Hi-Great news about the 2009 tax credit!!Is there any way to know what the plan is for 2010? I heard that it was going to be cut to around $5,000, is that justa nasty rumor (I hope)?
I’ll have to look into that. I have not heard the rumor. If I find anything, I’ll post!
Good question. I’ll find out and post about it this week.
My guess is that the the “rumor” refers to the fact that the current adoption tax credit will end when President Bush’s 2001 2001 “tax cuts” end after 2010 (unless it is specifically renewed by Congress). After 2010, there may still be an adoption tax credit at a smaller level (depending on what the public law was before 2001).
Here is my question: If you finalized in 2009 things look great to get the $12,150.00, but what if you adopt in 2009 and don’t finalize until 2010? Do you still get the credit for the year you adopt in or do you get the credit for the year that you are finalizing in?
Thanks!
If you finalized in 2009 things look great to get the $12,150.00, but what if you adopt in 2009 and don’t finalize until 2010? Do you still get the credit for the year you adopt in or do you get the credit for the year that you are finalizing in?
Thanks!
Erin,
I am sorry that I have not posted yet. I am still waiting to hear back from my adoption lawyer regarding your question.
thanks!!!
thank you so much! I can wait
Erin,
Erin,
I spoke with my lawyer this morning, this is what he had to say: After it is determined that you qualify for the tax credit, you then claim the credit on your taxes in the year which your adoption finalized. However, should you bring your child home in 2009 and then not finalize until 2010, your tax credit could be determined by when exactly in 2010 the tax credit is set to expire. In the beginning or the end of 2010. I have tried to find that out, but so far have not found a date. Do you know? My lawyer did not know. He did say that he would be surprised if the bill did not pass in the House and the Senate to be reinstated. I would too. Hopefully you have sent a letter to your congressman and senator encouraging them to support this bill. Every little bit helps! So, the first plan of action is to find out when exactly the bill is set to expire. After that, I would encourage you to talk to an adoption lawyer about it. If you find out, let me know and I will call my lawyer back and see if he can give me any more information. Hope this is helpful!
thanks. I found this http://forums.adoption.com/general-adoptive-parent-support/322866-tax-credit-expire.html
It looks like it expires 12-31-2010 at midnight, I googled 2010 tax credit expiration, adoption and saw this above date a few times.
Erin,
It is my understanding after speaking with our lawyer that if your adoption finalizes in 2010, you will receive the tax credit in 2011 when you claim it on your taxes. if the expiration date is correct, 12/31/2010, then it is good throughout the entire year, so you should not have a problem when you claim it on your taxes in 2011. Again, you will want to confirm this with your adoption lawyer, as I am not a professional. Hopefully this is helpful to you and feel free to ask anymore questions! Happy New Year!
Samantha
New info I just got today from our agency….
The National Council for Adoption, has publicized information regarding the Adoption Tax Credit. The following is an excerpt from their report:
Beginning in 2011, parents will be eligible for a reduced tax credit of $6,000 per adopted child with special needs and
ineligible for any tax credit for an adopted child without special needs.
Please note that this does not occur until 2011 but we need to be aware.
***What do you think about this? Have you heard about it?
Erin,
I made a post concerning your question. Let me know if it is helpful or not.
Thanks so much,
Samantha
Erin,
I have not heard about that, but I’ll look into it! Thanks for bringing it to my attention!
Thank you so much, you are amazing!
You are welcome. Happy to do it!
Hi. If my employer reimburses my adoption related expenses (as part of my employee benefit/income), can I still claim adoption tax credits?
Thanks, Chris
Chris,
My understanding is that as long as the employer adoption reimbursement does not exceed the maxium amount of money that the adoption tax credit equals than you can still apply for the tax credit. If you payed $40,000.00 for your adoption and your employer offers a $10,000.00 reimbursement than you should be able to receive the full amount of the tax credit because the two amounts do not exceed the total cost of your adoption. However, because you received the employer money you will deduct that amount from what you intend to claim on your taxes. Hopefully that makes since. Again, I am no professional so I encourage you to ask your social worker, adoption lawyer, etc..
Hello,
I was just wondering if anyone heard about the 2010 tax credit and if it is going to be renewed.
Also, if we adopt our child at the very end of 2010, but do not finalize in America, will we still qualify for the tax credit?
You can contact your senator and reps and encourage them to support the passing of the bill that will makes the tax credit permanent. See my earlier post below for instructions on how to do that!
http://adoptionupdate.wordpress.com/2009/04/26/adoption-tax-credit
Concerning your adoption question, do you know if America will recognize your adoption as final? Will you have to re-adopt in the U.S.? If your agency says that you do not have to re-adopt because your adoption finalized in your child’s birth country and the U.S. does require a re-adoption, than you should be able to qualify for the tax credit. But, you need to check with your agency on that!
Hope that is helpful!
I know in previous years you had up to five years to claim the tax credit, is this still true if your adoption is complete in 2009? Also, we were told that the tax credit only applies if you owe taxes at the end of the year. We usually get a refund. Do we loose the refund for 2009 because we over paid or does the credit go toward our total federal tax liability? Meaning we get a full refund of up to $12,150 depending on how much our liability is?
If you adoption finalizes in 2009 you are eligible for the tax credit. You claim it on your 2009 taxes. I have not heard about your second question concerning refund or owing on your taxes. Who told you that? Do you have a CPA or adoption lawyer to ask? I would start there.
Thought you might find this info from the IRS.gov website helpful;
“The adoption credit is an amount subtracted from your tax liability. For expenses paid prior to the year the adoption becomes final, the credit generally is allowed for the year following the year of payment. A taxpayer who paid qualifying expenses in the current year for an adoption which became final in the current year, may be eligible to claim the credit for the expenses on the current year return, in addition to credit for expenses paid in a prior year.”
We’ve paid most expenses in ‘09, but won’t finalize in ‘10. We’ll be able to deduct ‘09 expenses for the coming tax year.
We had hoped to adopt in 2009 and spent about $16,000 in adoption fees through our agency but had to back out as my husband lost his job. Are we still eligible for the 2009 adoption credit of $12,000?
It is my understanding that in order to qualify for the tax credit, you have to have a finalized adoption. So, no, you are not eligible. However, if you plan to complete the adoption in the future, you will qualify for the tax credit in the year that your adoption finalized. So, even if you spent $16,000.00 in 2009 and do not complete the adoption until 2010 or later you will qualify for the credit once everything has finalized. Assuming that the adoption tax credit is still a federal program. Hope that is helpful. Again, I am not a professional, so you may want to ask an adoption lawyer or your agency as well.