Adoption Tax Credit

lafayettegirl

Ladies & Gents:

The Adoption Tax Credit extension IS included in the fiscal cliff package the Senate is currently voting on...and by currently, I mean they are voting at 1:44 a.m. on January 1. I believe the tax extension is permanent, though I am trying to confirm, since I am not at work and getting this stuff via my BB.

Here is what is included:

1. increases the expense limit and exclusion to $10,000 for both non-special needs and special needsadoptions,

2. makes the credit independent of expenses for special needs adoptions,

3. increases the phase out point to $150,000,

4. indexes for inflation the expense limit and phase-out start point for both the credit and the exclusion,

5. and allows the credit to apply to the AMT.

Some of this stuff is weedy, so if you want to know more, let me know. For now, though, be assured the extension is in the package!

(Insert sigh of relief here!)

lafayettegirl

The Senate passed the package 89-8. It now goes to the House of Representatives for a vote, which should occur no earlier than noon on January 1.

Rachel Sonnier

Thank you so much for keeping us posted!! Happy New Year!

maryoosa

Thanks! I was googling and my google-fu failed me.

Jen260

Thanks for the information. I haven't seen any info anywhere else. Here's hoping this is true. We are waiting to adopt in 2013 

fledgegrl1

Thanks so much for keeping us posted on this! 

[Deleted User]

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alancook01

Is the tax credit refundable? If its not then it is utterly useless to many of us.

DaisyZH

Thank you so much for posting this!  Like many, we would really need this credit.  I'll echo PPs, do you know if it's refundable (not sure if that's the right word - like if you don't owe $10,000 in taxes is it still helpful?). 

kimmyb1020

I was trying to find something about it this morning and wasn't successful, I knew my Bump adoption ladies would know something! Can't wait to hear more!

donmitch79

Where did you find the information? My husband and I have been searching and would love to read more about the 2013 tax credit.

Thanks a ton for posting!! 

lafayettegirl

UPDATE: The House has not yet passed the bill and seems to be having some issues with it (non-adoption tax credit related). We'll have to see how it works out over the course of the next several hours/days.

I have the info because I work there. I will try to get more specific information for all of your questions,especially on the refundability. My initial understanding is that the credit remains NOT refundable, but don't quote me yet.

alancook01

Maybe its not too late to get it made refundable in the house bill. The congress offices are closed today but i will call mine in the morning and ask about it. 

donmitch79

Thank you for the updates!!!

HopefulHalley10

Thank you for your updates!

maryoosa

The house passed the fiscal cliff bill.

LIQueen

maryoosa:

The house passed the fiscal cliff bill.

 

It is passed, but did it pass as Non-refundable?

maryoosa

Looks like it's non-refundable.

LIQueen

maryoosa:

Looks like it's non-refundable.

 

This is what someone wrote on the "save the adoption tax credit" facebook page...  when the budget that the senate passed last nite goes to the house someone has to bring it up for a vote to be added to the budget and sent back to the senate for final approval, were not completely without hope just yet.

 

So maybe we still can have hope?

alancook01

LIQueen:

maryoosa:

Looks like it's non-refundable.

 

This is what someone wrote on the "save the adoption tax credit" facebook page...  when the budget that the senate passed last nite goes to the house someone has to bring it up for a vote to be added to the budget and sent back to the senate for final approval, were not completely without hope just yet.

 

So maybe we still can have hope?

 

 

It appears they passed the bill as it stood, which means its non-refundable  

alancook01

lafayettegirl:

Ladies & Gents:

The Adoption Tax Credit extension IS included in the fiscal cliff package the Senate is currently voting on...and by currently, I mean they are voting at 1:44 a.m. on January 1. I believe the tax extension is permanent, though I am trying to confirm, since I am not at work and getting this stuff via my BB.

Here is what is included:

1. increases the expense limit and exclusion to $10,000 for both non-special needs and special needsadoptions,

2. makes the credit independent of expenses for special needs adoptions,

3. increases the phase out point to $150,000,

4. indexes for inflation the expense limit and phase-out start point for both the credit and the exclusion,

5. and allows the credit to apply to the AMT.

Some of this stuff is weedy, so if you want to know more, let me know. For now, though, be assured the extension is in the package!

(Insert sigh of relief here!)

 

 

No sigh of relief here. Without the refundability part of the credit, this is worthless. 

elissaann26

alancook01:

lafayettegirl:

Ladies & Gents:

The Adoption Tax Credit extension IS included in the fiscal cliff package the Senate is currently voting on...and by currently, I mean they are voting at 1:44 a.m. on January 1. I believe the tax extension is permanent, though I am trying to confirm, since I am not at work and getting this stuff via my BB.

Here is what is included:

1. increases the expense limit and exclusion to $10,000 for both non-special needs and special needsadoptions,

2. makes the credit independent of expenses for special needs adoptions,

3. increases the phase out point to $150,000,

4. indexes for inflation the expense limit and phase-out start point for both the credit and the exclusion,

5. and allows the credit to apply to the AMT.

Some of this stuff is weedy, so if you want to know more, let me know. For now, though, be assured the extension is in the package!

(Insert sigh of relief here!)

 

 

No sigh of relief here. Without the refundability part of the credit, this is worthless. 

I am definitely not a tax expert, but I *believe* you can carry forward this credit forward.  This means that it will reduce your tax liability in future years, which will allow you the financial benefit although somewhat deferred.  For example, if you qualify for $10k of adoption credit but only have a $6k tax liability in 2012, you are able to carry forward the unused $4k portion in 2013.  So if you owe $5k in 2013, you would only pay $1k.

 

Does anyone know if the carry forward is capped to a certain number of years? 

maryoosa

Frankly, for us, even though it's not refundable, it's still worth it. Because we cannot be legally married- meaning we cannot file joint federal tax returns, my partner gets taxed for my health insurance (which we use from her job- because we are both city employees and are required to use only one insurance and hers is better than mine). So, having this will help reduce her tax burden. Granted, I prefer it were refundable, but it's still useful.

lletuli56

Do you know if the adoption tax credit being voted on with the cliff is refundable for 2012?

SoSweet06

 At one point (prior to it being refundable), you could carry forward for 5 years. It makes it more difficult if you've taken out a loan that is collecting interest, but obviously it's better than nothing--unless you have no tax liability at all.

lletuli56

I was told 5 years by my adoption worker.

stepper1725

Lurker here (beginning the adoption process in 2013). I am not an accountant, but if the credit is non-refundable, couldn't you just adjust your withholdings throughout the year to balance out the amount of the credit, similar to the adjustments for the child tax credit? So rather than claiming 1 allowance, you maybe claim 4 or 5, so that the amount of taxes withheld from each paycheck is smaller. Let's say at the end of year, you'd then owe a few thousand dollars in taxes, but you could reduce that to zero with the credit and just carry forward the credit & repeat until you've used up the $10k.

Edit: On page 17, there is a worksheet for doing this:

 https://www.irs.gov/pub/irs-pdf/p919.pdf

MagickalNarwhal

stepper1725:

Lurker here (beginning the adoption process in 2013). I am not an accountant, but if the credit is non-refundable, couldn't you just adjust your withholdings throughout the year to balance out the amount of the credit, similar to the adjustments for the child tax credit? So rather than claiming 1 allowance, you maybe claim 4 or 5, so that the amount of taxes withheld from each paycheck is smaller. Let's say at the end of year, you'd then owe a few thousand dollars in taxes, but you could reduce that to zero with the credit and just carry forward the credit & repeat until you've used up the $10k.

If you have a tax liability, then you will get use of the credit, no matter what happened with your withholdings throughout the year. A non-refundable credit however will NEVER be useful to someone who doesn't have a tax *liability* (which is different than owing taxes at the end of the year.

I just put in some numbers in my tax software, and a family of three (comprised of two legally married spouses and one kid) making less than about $33,000 won't have a tax liability at all, so they would not be able to take use of the credit.

If you want to see if you had a tax liability last year, you can look on your federal 1040 tax return (long form) and see if there's anything on line 55 to see if you had a tax liability.

stepper1725

MagickalNarwhal:

stepper1725:

Lurker here (beginning the adoption process in 2013). I am not an accountant, but if the credit is non-refundable, couldn't you just adjust your withholdings throughout the year to balance out the amount of the credit, similar to the adjustments for the child tax credit? So rather than claiming 1 allowance, you maybe claim 4 or 5, so that the amount of taxes withheld from each paycheck is smaller. Let's say at the end of year, you'd then owe a few thousand dollars in taxes, but you could reduce that to zero with the credit and just carry forward the credit & repeat until you've used up the $10k.

If you have a tax liability, then you will get use of the credit, no matter what happened with your withholdings throughout the year. A non-refundable credit however will NEVER be useful to someone who doesn't have a tax *liability* (which is different than owing taxes at the end of the year.

I just put in some numbers in my tax software, and a family of three (comprised of two legally married spouses and one kid) making less than about $33,000 won't have a tax liability at all, so they would not be able to take use of the credit.

If you want to see if you had a tax liability last year, you can look on your federal 1040 tax return (long form) and see if there's anything on line 55 to see if you had a tax liability.

Ah, ok, thanks for the clarification!