Foster Care Adoption Benefits – The Adoption Tax Credit
One of the many things I lobbied for in Washington, DC was a refundable adoption tax credit aimed specifically at foster care adoption. It was opposed for many years as being “too expensive” and a “risky proposition” which would lead to the elimination of the non-refundable tax credit for foreign adoptions claimed by wealthy white adoptive parents.
Among the many provisions of the Patient Protection and Affordable Care Act (P.L. 111-148) of 2010 was an expansion of the tax credit for adopting parents. A new factsheet from the Internal Revenue Service, Six Things to Know About the Expanded Adoption Tax Credit, provides details about the necessary steps for adoptive parents to take to claim the tax credit.
P.L. 111-148 increased the tax credit from $10,000 to as much as $13,170. In addition, the credit, which was originally set to expire at the end of 2010, was extended through the end of 2011. Another new provision finally allows refunds when the tax credit results in a negative balance in taxes owed for the year; previously the credit was nonrefundable.
The factsheet also lists the forms and documentation that are required to process a claim for the credit. Links to an Adoption Benefits FAQs, the required form, and instructions are included. There also are links to short videos in English and Spanish that provide an overview of the new credit.
The factsheet is available here on the IRS website.