Child adoption expenses can be reduced through the Federal Adoption Tax Credit. Adoptive parents are given the valuable benefit of including in their income tax return the adoption cost incurred up to a certain limit. With this tax credit, adoptive parents can be relieved of most of the costs of adoption. The family tax benefits assist the parents in raising their adopted children. Here are two benefits of this tax credit:
1. Allowed Tax Credits
The new law states that the maximum allowable tax credit amount is raised to $13,170 per adopted child. For domestic adoptions, you can qualify for tax credit for your adoption expenses even if the adoption did not push through finalization while in international adoption. The adoption should be successful in order to qualify for tax credit. For domestic special needs adoption, full credit can be taken even if the qualified adoption expenses do not reach the limit.
2. Refundable Tax Credit
The change in law also states that the tax credit is now refundable. This means that even adoptive families who owe zero taxes on their tax return can get reimbursements in the form of an actual refund from the IRS in the applicable tax credit amount for adoption related expenses.With the government helping out adoptive parents through adoption tax credit, it makes the adoption process a manageable one. With the above-mentioned benefits, hopefully more couples will choose to adopt children who are searching for devoted and loving parents.