(Submitted to NorthIowaToday.com by David A. Grooters)
With the signing of the new health care bill in 2010, adoptive parents received some very welcome news. Not only will the adoption tax credit be extended until December 2011, but it has also been increased from $12,170 to $13,170 for adoptions occurring after January 2010. For the first time, the credit will now be refundable. Families may receive a refund for documented “qualified adoption expenses” for the adoption of their child.
What this means to adoptive families:
The best news: 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 of tax owed overall by this amount. However, the news gets even better. For the first time, families may be getting cash back from the IRS for their adoption expenses. That’s right, the credit may now be taken as a refund for the first time. In the event that the couple owes less than the tax credit amount stated, they may receive the balance as a refund on their federal taxes.
More good news: For 2009 and prior years, the credit was a non-refundable tax credit with any unused credit being carried forward for up to 5 years. Now, current year credits and prior year carry over credits are now refundable as discussed above.
This adoption credit only includes “qualified adoption expenses. Most adoption expenses qualify, but some do not.
The tax credit is important to both international and domestic adoptive families, but it’s greatest beneficiaries are the children who will now have permanent families thanks to adoption being more affordable.
Feel free to visit with me if you have any questions or concerns regarding claiming this credit.
David A. Grooters is a Mason City attorney practicing in areas including adoption law with the law firm of Pappajohn, Shriver, Eide & Nielsen P.C. He can be reached at his office at 103 East State Street, Suite 800, Mason City, Iowa, via phone at (641) 423-4264, (641) 423-3145 (fax), or grooters@pappajohnlaw.com.
The firm’s website is: www.pappajohnlaw.com||
