Adoption Tax Credit?

to my understanding it is more like a reinbusement of money that has already been paid and spent by the couple or person adopting.

My question is, do you know the Adoption Tax Credits reason for existance?

I am little confused by many of the responses saying that the tax credit was intended for and should only be available to those adopting from the foster system. The tax credit can only be used to reimburse the adoptive parents for money they spent out of pocket for eligible adoption expenses related to the adoption process itself. (basically you can only be reimbursed for money you actually spent on fees) Since adopting from foster-care requires adoptive parents to pay little or no adoption fees (usually a couple hundred dollars if any), then how would these families really benefit from the tax credits, and why would they go up to $11,000 in reimbursements if this was their only intended purpose? Also, adoptive parents do not recieve any of credit back until they file taxes for the year when the adoption was finalized. We didn't recieve any of the tax credit money back until over a year after our oldest son arrived home. Families who do not have the money to cover the portion of the fees covered by the tax credit will still have to get a loan, borrow money from family, etc, until the get the money back often 1- 5 yrs later (depending on how much they owe. in taxes) I also don''t understand how a family could "donate the ten K to a mother, who is otherwise fit, to raise her child? Instead of adopting him/her?" -If the family didn't adopt the child then there would be no fees to reimburse, and they wouldn't be eligible for the tax credit, so how would they give that money to the mother? Also, in our case poverty was not the reason our children's birthmothers placed them for adoption, social stigmas in a very conservative culture were unfortunately a big part of the reason, which money can not change. Even if it were the issue and we were able to get the money to give to them, since their first mothers live in Seoul, the 3rd most expensive city in the world, I doubt that $10,000 would do much to support a single mother and child, especially since no other social welfare programs would be offered to help them after the money was gone (probably about 6 months later)

Can someone help.

My wife and myself adopted two special need kiddos; these are our only kids. We will be claiming the Adoption Tax Credit for the full amount and carrying it over for the next four years. My question: Can we claim the ATC before the Child Tax Credit? Since the ATC will clear out our tax burden, can we then "move" the CTC down the 1040 to the Additional Child Tax Credit. If not, due to our tax burned we will not be able to use up the full amount of the ATC within the five year time period.

the money comes from your paid taxes. it is a federal grant type of reimbursement. the money available doesn't appear out of nowhere. it's a part of our federal reserve, which is in the negative as usual. it comes from the same place money for welfare, social security, etc.. come from. our working pockets.

the tax credit became law in 1997. it was orginally proposed to encourage adoptions of special needs children. but in the we must be fair to everyone society it covers any accepted adoption expense incurred for any type of adoption. excpet for those of step parent type of adoptions.

in 2002 the credit was raised from $5,000- around $10,000 with a maximum gross income of around 170,000. if you claim more than that on your federal return then you do not qualify for the credit.

in 2006 the amount was again raised to $11,390 for allowable adoption related expenses.

this is a credit, it can be carried over up to 5 years after the initial claim. you can only use this to offset your tax liability for that year. so if you owe federal let's say $3,000 and after all other deductions and itemizations you still owe federal $1,500. you will then use $1,500 of your tax credit. that will be subtracted from the allowed federal amount and the remaining balance carried over into the next 4 years. at the end of 5 years you can no longer claim a credit.

a few states followed suit and have their own adoption credit as well. usually you can claim up to 25-75% of the amount of the credit you are claiming for federal to offset your tax liability for your state taxes.

if you notice, once the amount of the federal tax credit goes up so does the fees agencies and attorneys charge for an adoption.

examples of allowable reimbursable monetary claims are

expenses toward the mother relinquishing (such as any food, housing or utility)

expenses of the birth of the child

expenses for delivery of the child

some travel expenses

homestudy fees

agency fees

attorney fees, etc....

so if you adopt from foster care and your allowable reimbusements would be zero, therefore you would get zero available as a tax credit. this law was brought about and fought for by same people who wish to keep OBC's sealed and open contact to a minimum. it encourages infant adoption and the ongoing success of agencies.

Look, it's like your medical expenses that aren't covered by insurance. When we adopted, we had no kind of insurance to help with expenses like that. When we had a baby I gave birth to, our medical insurance covered most of the cost. What it didn't cover could be declared on our taxes under uncovered medical expenses, assuming we had enough expenses that year to make it worthwhile claiming them (and we did.) The adoption credit is NOT a deduction, you can't even get the whole thing if your income is above a certain point.

My husband is a CPA, and we did get something like $8,000 in relief that way, but we spent around $20 K, so it's not like people are getting rich off of it.

And if people don't like the idea of adoptive parents being able to credit those expenses, then complain about people crediting their uncovered medical expenses and other things like that as well. Don't pick on one group just because you have an axe to grind about adoption.

I completley agree with you and no I am unsure of where the tax credit comes from but I do know it is not cheap to adopt a child and it takes a very big heart to do so :)

In Canada the adoption tax credit is for adoption expsenses, either for travel, legat etc. WE don't qualify as their is no expenses for adoptiong from social services.

Our adoption credit was $10,390 of qualifying expenses.....that was spaced out over a 3 year period.

The actual cost of the adoption was over $27,000 and not a single penny went to an adoption agency. It was all lawyer and court fees.

In my opinion the credit should be larger Obama has already stated he would increase it. If I am not mistaken Bill Clinton passed it so it only stands to reason Hillary would increase it also. I am unsure of McCain's position.

I believe the money comes from taxpayer dollars.

If single and low income parents are entitled to welfare programs then adoptive parents are entitled to a fraction of that in the form of the adoption tax credit.

This is a tax credit which means it reduces your personal tax liability. The amount of the tax credit is based on income and there is a ceiling. If you make more than the ceiling then you don't qualify for the credit.

I was finally able to use the adoption tax credit this January... and I brought my son home in 2005! The tax credit did not pay all my adoption fees, it certainly helped, but only covered less than 1/3 of my $30,000 documented and proved expenses for my son's international adoption. I wish it paid for all adoptions/expenses.

I don't know where the credit comes from, but I'm glad its there, wish it was more, and am looking forward to your answer.