How does employer reimbursement work AND the tax credit

LaVitaBella

Questions, questions, questions.  Sorry ladies!  Hopefully one day I can help more than I ask. 

DH and I both work for a Diocese.  He as an administrator and myself as a teacher.  Our employer gives a reimbursement for adoption.  (It's only per household, too bad!)  Anyway, how does this typically work?  We know when to file the paperwork, but in what form do we get money?  Paychecks?  It is taxable. 

Also, forgive me because it's been about 7 years since I took accounting, but what real money will we see from the tax credit?  How does the government give that out?  I understand that if we had taxes to pay, they would put the credit toward that, but we certainly don't have $12,000 in taxes to pay each April.  Do we get a check for the rest? 

TefLepOM

Not an accountant, but I found this.  You would get a refund of any amount above what you zero out as.  So, if your taxes are $12,000, since the credit is $13,170, you would get the difference.

 There is good news in the new health care bill for adopting parents.  H.R. 3590 includes a provision to extend the adoption tax credit until December 2011 (see pages 904-906). The tax credit has also been increased from $12,170 to $13,170 for adoptions occurring after January 2010. The health care bill also allows the tax credit to be refundable.

What this new tax law means for prospective adopting parents.  According to Lee Kutz, of Kutz Accounting in Joplin, this new tax law means that adoptive parents may apply up to $13,170 of their adoption expenses toward their taxes owed, thereby decreasing the amount owed overall by this amount. In the event that the couple owes less than the tax credit amount stated, they may receive some or all of the balance as a refund on their Federal taxes. Many groups and individuals have successfully lobbied to help extend this tax credit beyond its original expiration date of December 2010, and are still seeking to make the tax credit permanent.

Since most international and private domestic adoptions cost upward of $10,000, this tax credit makes adoption much more affordable for families from many different income brackets. This, in turn, helps more children find permanent homes.

Art Teacher

My understanding is that we will have to apply for reimbursement through DH's work first.  I think in our case, we will get a separate check from his work.  Not sure if it is taxable; I think our tax person said no, but I might be wishful thinking on that one.

Then the balance of what you paid for the adoption costs would be then applied to your tax credit.  Whatever you owe in taxes would be deducted from that credit and then you would receive that balance as your refund.

That's how it was explained to me.

goro28

DH's employer let us get reimbursement before we finalized which was nice.  In our case it was 5K and all we had to do was show them a receipt from our adoption agency showing more than 5K in expenses.  We received payment in the form of a check and it had tax deductions in it (similar to the tax rate for bonuses).