Friday, January 6, 2012

Adoption Tax Credit

There is a tax credit available for people who adopt. It is intended to offset the cost of traditional adoption and provide incentive for perspective parents to adopt special needs children from Foster Care.

When adopting from foster care, almost all of our kids qualify as "special needs". Some of the qualifications for that are sibling groups, minority children, a child that has been in care over 1yr, or children with medical or developmental disabilities. If you adopt a special needs child, you are eligible for the entire adoption tax credit.

In years past, this credit could be used against your income tax. So you would get a bigger return, but the benefit was linked to your income and how much you pay in taxes. So for Middle class families, it could take years before you saw the full benefit of the tax credit. If you were a Grandma on Social Security who adopted 3 of your Grandbabies, you would never see this money because you don't owe taxes.

In 2010, however, President Obama signed the Patient Protection and Affordable Care Act which had some small print that made this Adoption Tax Credit a refund. This means that for every child adopted from foster care through 2011, their adoptive parents would a receive a $13,170 check regardless of their income or taxes owed. This was great news for people who got to adopt in these past 2 yrs. Granny gets the money she needs to move to a bigger apartment or start college fund for her kids.

Unfortunately, this refundable credit went away on December 31, 2011.

The plan for people adopting in 2012 is that you can get credit up to $12,170 for each adoption against your income tax. However, the remaining amount can not be used in following years. You'll get a bigger tax return for this year, but not the check for the credit amount and there is no benefit beyond 2012.

In 2013, the Adoption Tax Credit goes away all together.

There is a petition going around to try to get the Tax Credit extended. I signed it, and I hope you will too. The financial incentive shouldn't be the reason people adopt, but hopefully it helps keep siblings together or keep higher needs kids in stable homes.

Click here to sign the Adoption Tax Credit Petition

This is a form letter you can send to your State representative


  1. This is really important (I've already signed!) and very well written. Would it be okay with you if I repost this as you wrote it (with proper credit, of course) on my blog, so we can get a few more signatures?

  2. That would be great Rachael. This issue needs all the exposure we can give it. Thanks!

  3. Im going to take your permission for Rachael for myself, too!

    I already knew this information, but I couldn't figure out how to write it without sounding mad that our state screwed us out of being eligible for any credit because of their holding onto our paperwork for so long. This will help. :)

  4. Duly posted! Thanks for explaining the situation so clearly. I'll do my best to spread the word!

  5. With your permission, I would also like to re-post with proper credit.

  6. Can anyone tell me what happned with this? Thanks

    1. If you google "adoption tax credit" it will tell you.

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