Tax Credit Info

Happy Thursday All,
 All of this Tax credit info can be a bit much at times, I found this helpful, if you have experience you would like to share with other families on this topic or others, please do.

Christy

6 Things to know About the Expanded Adoption Tax Credit

 

If you are adopting a child in 2011, the Internal Revenue Service encourages
you to familiarize yourself with the adoption tax credit. The Affordable Care
Act increased the amount of the credit and made it refundable, which means
it can increase the amount of your refund.

Here are six things to know about this valuable tax credit:
1. The adoption tax credit, which is as much as $13,170, offsets qualified
adoption expenses making adoption possible for some families who could
not otherwise afford it. Taxpayers who adopt a child in 2010 or 2011
may qualify if you adopted or attempted to adopt a child and paid
qualified expenses relating to the adoption.

2. Taxpayers with modified adjusted gross income of more than $182,520
in 2010 may not qualify for the full amount and it phases out completely
at $222,520. The IRS may make inflation adjustments for 2011 to this
phase-out amount as well as to the maximum credit amount.

3. You may be able to claim the credit even if the adoption does not
become final. If you adopt a special needs child, you may qualify for the
full amount of the adoption credit even if you paid few or no adoptionrelated
expenses.

4. Qualified adoption expenses are reasonable and necessary expenses
directly related to the legal adoption of the child who is under 18 years
old, or physically or mentally incapable of caring for himself or herself.
These expenses may include adoption fees, court costs, attorney fees
and travel expenses.

5. To claim the credit, you must file a paper tax return and Form 8839,
Qualified Adoption Expenses, and you must attach documents supporting
the adoption. Documents may include a final adoption decree, placement
agreement from an authorized agency, court documents and the state’s
determination for special needs children. You can still use IRS Free File
to prepare your return, but it must be printed and mailed to the IRS,
along with all required documentation. Failure to include required
documents will delay your refund.

6. The IRS is committed to processing adoption credit claims quickly, but it
also must safeguard against improper claims by ensuring the standards
for this important credit are met. If your return is selected for review,
please keep in mind that it is necessary for the IRS to ensure the legal
criteria are met before the credit can be paid. If you are owed a refund
beyond the adoption credit, you will still receive that part of your refund
while the review is being conducted.

For more information see the Adoption Benefits FAQ page available at
www.irs.gov or the instructions to IRS Form 8839, Qualified Adoption
Expenses, which can be downloaded from the website.