About the $10,000 adoption tax credit

[Tiggeroo]

I understand you get a $10,000 tax rebate if you have adopted a child. Must you have paid this much in taxes that year? Must you have had that much in expenses from the adoption and verify this ?

 

[Tiggeroo]

I meant to post this on the CB. Well maybe somebody here can answer it.

 

[Steve H.]

From irs.gov:

You may be able to take a tax credit of up to $10,000 for qualifying expenses paid to adopt an eligible child (including a child with special needs). The adoption credit is an amount subtracted from your tax liability. Although the credit generally is allowed for the year following the year in which the expenses are paid, a taxpayer who paid qualifying expenses in 2002 for an adoption which became final in 2002, may be eligible to claim the credit on the 2002 return [i.e, The adoption credit is not available for any reimbursed expense.]. However, in addition to the credit, up to $10,000 paid or reimbursed through the year 2002 by your employer for qualifying adoption expenses may be excludable from your gross income.

Translation: The $10,000 credit is a reduction of your tax liability. I believe if you have less than $10,000 of taxes owed, then you would not get the full $10,000 credit (as I don't think you can have a negative tax liability).

 

[caitycaity]

http://www.childrenshopeint.org/adoption_tax_credit.htm
http://www.adoptionstogether.org/AdoptionServices/federal.htm

it is also my understanding that it's not $10,000 for everyone; it depends how much your expenses were and how many of those qualify.

 

[jellymoon]

It is based on income-- once your family income hits $75,000 a year, it starts to decrease. You do get the full $10,000 credit even if your tax isn't that high. You just get to keep applying it for however many years it takes.

You do not get the credit for adopting period. You must prove your adoption expenses. If your adoption expenses are $6000, then you only get a credit of up to $6000---- you don't get any extra.

The idea of the credit is to make adoption more affordable to more families, decreasing the number of waiting children. The credit is not available for international adoptions--- only domestic. I believe there is a slightly higher credit related to adopting a child with a disability or an older child, or a child with severe medical/mental health challenges.

 

[RUDisney]

As I posted in the other debate, the tax code says, "The adoption credit or exclusion cannot be taken for a child who is not a United States citizen or resident unless the adoption becomes final."

The income amounts are that you get the full $10,000 credit, with income up to $150,000. Between $150,000 and $190,000, the amount of this credit starts to decrease and you get none if your income is over $190,000.

You must be able to prove that you've had qualifying expenses and that you were not reimbursed for any of these expenses either through donations or by your employer.

 

[RUDisney]

Oops, I forgot to add that the credit is now the same for adopting a special needs child. Prior to 2002, a person could receive a credit of $6,000 for a special needs adoption or $5,000 for a, for lack of a better word, "regular" adoption. Now, you'd get up to $10,000 for either.

 

[jellymoon]

RUDisney,

Wow! It seems there have been LOTS of changes. When we completed one of our adoptions, we really had to struggle to figure out how to 1) find money to pay for the adoption without 2) going over the $75,000 income limit that would have decreased our credit. We remember laughing that in the year we really needed the money, we couldn't sell off stocks/investments in order to fund the adoption.

Glad to hear things are more reasonable now. I love the $10,000. That should pretty much cover the expenses of most any private domestic adoption if all is on the "up and up"

 

[Luckymommyx2]

As far as a child being as US citizen, the Citizenship Act President Bush enacted should automatically cover internationally adopted children. (I don't believe it was country specific but I could be wrong.) Also, do not forget to look into your state subsidy program which is not very well known. We had no problems getting our tax credits for both of our internationally adopted children. Good luck!