This was supposed to be a simple assignment, given by my fearless leader, to write something up about the federal adoption tax credit. Simple enough. Once I started looking into the details though, my brain got tangled up in knots. I’m still not sure if I can figure out every detail, but it’s important to at least know what to ask about. So here’s the general idea- families who adopt a child with special needs (using the term broadly, which includes almost all CYFD adoptions, and some others as well) from foster care can claim a federal adoption tax credit without needing to incur or document expenses. This credit is worth looking into for any adoptions after 2003. The per-child tax credit is $12,150 for adoptions finalized in 2009, and families have six years to use the entire credit. That’s a lot of money and guess what! In 2004, only about a quarter of qualifying families took advantage of this policy.
Here are a few key points-
*There are some guidelines on income levels
*You can find Form 8839 at
www.irs.gov/pub/irs-pdf/f8839.pdf or by requesting it from 800-829-1040. This is the official form to claim your credit.
*Because you do not need to document expenses for children with special needs, simply enter $11,650 for adoptions finalized in 2008 (and $12,150 for 2009) as long as your child receives adoption subsidy.
*If you can claim your child as a dependent, then you should also look into the Child Tax Credit. The Child Tax Credit and the Adoption Tax Credit interact and may reduce the Child Tax Credit you can claim.
*If you finalized an adoption in 2003 or a later year for which you have already filed your taxes, you can amend your return to take advantage of the federal adoption tax credit.
Talking about adoption subsidies or tax rebates is sometimes awkward. (And like my granddaughter said recently, even the very spelling of “awkward” is awkward.) So I decided to share my favorite analogy- winning a new car. When we were offered a two-for-one out of the blue adoption a few years ago, I felt like I had won the lottery. What a surprise and blessing to be offered two actual beautiful children for free! Unbelievable! But a subsidy! That’s like winning a brand new car and then finding out that the gas is included! And a $12,150 tax credit! Oh my gosh! That’ll buy new tires and oil changes (or new shoes and toothpaste) for a long time.
If you want more specifics, email me at carol.gloetzner@la-familia-inc.org and I’ll forward you more specific information and contact numbers.
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