Private and independent domestic adoptions can cost anywhere from $5,000 to $40,000, and expenses for intercountry adoptions generally total between $7,000 and $40,000. Domestic adoptions out of foster care are typically much less expensive, usually costing the adoptive parent $2,500 or less.
Congress introduced the Adoption Promotion and Stability Act in 1996 to “help families defray adoption costs.”
Unfortunately, while the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) made the adoption tax credit permanent, the provisions which raised the amount that adoptive families can claim and increased the income eligibility phase-out range will sunset on December 31, 2010. Thus, beginning in 2011, the amount adoptive parents will be able to claim under the adoption tax credit will revert to the pre-EGTRRA levels of $6,000 per special needs child and $5,000 per non-special needs child. Additionally, adoptive families reporting $75,000-$115,000 in annual adjusted gross income will again be restricted in the amount they can claim, and those reporting more than $115,000 in annual adjusted gross income will again be prohibited from claiming the tax credit at all. Several bills have been introduced in Congress to repeal the sunset and make the EGTRRA reforms of the adoption tax credit permanent.
At the center of this debate is a recent Treasury Report which found that parents who adopted children internationally account for a disproportionately large number of adoption tax credit recipients, while parents who adopted children from foster care represent a disproportionately small number. More specifically, international adoptions accounted for 34 percent of all adoptions supported by the tax credit despite making up only 15 percent of all adoptions in the United States, while domestic adoptions out of foster care made up 18 percent of adoptions supported by the tax credit despite making up nearly 40 percent of all adoptions in the United States. This finding has led some to claim that the adoption tax credit is not fulfilling a primary goal of promoting domestic adoptions out of foster care. Some advocates have suggested that the federal government should therefore eliminate the adoption tax credit and redistribute the funds saved to other pro-adoption programs.
The Adoption Promotion and Stability Act of 1996 had two purposes, first among which was “to defray adoption costs for families seeking to adopt” by establishing the adoption tax credit. The bill made no distinction between adoptions out of foster care and any other type of adoption.
Increasing subsidies to adoptive parents has been one of the most effective ways of boosting the adoption rate.
Most importantly, the EGTRRA provisions to the adoption tax credit due to expire in 2011 should be made permanent.
For 2009, the maximum adoption credit has increased to $12,150. This amount is phased out if your modified adjusted gross income is between $182,180 and $222,180. You cannot claim the credit or exclusion if your modified AGI is $222,180 or more.
For information on Special Needs Adoption Tax Credit for 2009 go to North American Council on Adoptable Children.
To take the credit or exclusion, complete Form 8839 (PDF), Qualified Adoption Expenses, and attach the form to your Form 1040 (PDF) or Form 1040A (PDF).
See irs.gov (topic 607 adoption credit)
“The Adoption Tax Relief Guarantee Act of 2009, H.R. 213.” Written to repeal the sunset of the Economic Growth and Tax Relief Reconciliation Act of 2001 with respect to the expansion of the adoption credit and adoption assistance programs. This legislation will make the tax credit permanent. Unless legislation is passed, the Federal adoption tax credit that allows many adopting families to take a credit of up to $12,150 (2009) is scheduled to expire in December 2010. (For information on other legislation involving adoption go to adoptioncouncil.org/policy/fed_leg.html.)
Help Make the Current Federal Adoption Credit Permanent by Writing to your Representative
Here is how:
Find the name and Washington, D.C. mailing address of your Representative and Senators at www.congress.org. To find e-mail addresses, click through to the Senator’s or Congressperson’s Web site.Here is how:
Next, log on to THOMAS (Library of Congress) to find out whether your Congresspersons are already co-sponsors of the legislation. Here is how:
On the THOMAS opening page, under “Search Bill Summary and Status,” search by bill number for H.R. 213. Then click on “Bill summary and Status.”
(Click to enlarge.)On the page that comes up, click on “Cosponsors,” “Text of Legislation,” or “All Congressional Actions” to follow the progress of the bill.
If your representatives have not signed on as co-sponsors of the bill, send them your request that they do so. Tell them how important the tax credit was to you when you adopted your children, or how much you and other families you know are counting on it to be available in the future.
Act today, your efforts make a difference.
