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What is the Adoption Tax Credit?

US taxpayers who adopt a child may qualify for the adoption tax credit under the Internal Revenue Service guidelines. Any child under the age of seventeen is qualified for adoption or a child of any age who is a US citizen or resident alien and suffers from and/or has been diagnosed with physical, mental, or intellectual disabilities.  All children adopted from foster care with an adoption assistance agreement from state or county are considered special needs for purposes of the tax credit. Just because a child is disabled does not mean they are considered special needs under the tax credit. No child adopted internationally is considered special needs for the adoption tax credit.

The Adoption Tax Credit was established to assist adoptive parents in helping the process to be less financially burdening and to encourage permanent placement in loving homes. The tax credit can be a long and cumbersome process, full of rules and strenuous regulations in order to receive a refund check or other tax reduction benefits. The Internal Revenue Service provides Tax Form 8839 to be completed; excess credit can be carried over for up to five years.  If the child does not yet have a Social Security Number, you must apply for an Adoption Tax ID Number in order to claim the child as a dependent. The established credit amount can be as much as $12,150.00 US dollars for each child adopted. The total may fluctuate annually and can cover a multiple year tax credit plan. The typical expenses covered in this tax credit include; but are not limited to, travel expenses (passport, lodging and food), adoption fees, court costs, medical expenses, attorney fees, and any necessary background checks that may be applicable.  These guidelines vary for each state and the amount is parallel to the expense incurred. If the child is a special needs child the full amount of the credit is awarded, even if it is less than the tax credit amount. Any amount paid by an employer should be deducted.

There are a variety of programs to source adoption requests including; Stepparent Adoption Easy which proclaims one hundred percent guaranteed satisfaction or money back guarantee. The Adoption Process allows you to download a free kit to assist you in getting started. This particular tax relief credit is designed to encourage adoption for those who are interested.  The Adoption Tax Credit is a permanent tax credit, meaning it was extended without a specific expiration date. Congress can still choose to make changes to the credit in future legislation. For 2013, the maximum adoption credit amount is $12,970 per child and begins to phase out for families with modified adjusted gross incomes above $194,580 and the credit will go away completely for those with incomes around $234,580. Qualified adoption expenses do not include funds received under any state, local, or federal program; carrying out a surrogate parenting arrangement; adoption of spouse’s child (step-parent adoptions are excluded); paid or reimbursed by your employer or any other person or organization; or deductions under any other provision of federal income tax law.