Talking about T-A-X-E-S this week will be bitter to some and sweet to others, depending on if you are mailing a check or waiting by your mailbox for one! However, there is some updates that you should be aware of as we proceed through the coming year. The signing of the Health Care Bill in March was a controversial topic, to say the least. However, most of us will agree that a positive result of it is the Adoption Tax Credit which increased from $12,150 to $13,170. The credit has been extended through December of 2011 and is now refundable (if the family has no tax liability, the IRS will refund the amount due). This is not a deduction, it is a dollar for dollar credit applied to the tax that a family pays to the government. I am not going to pretend to understand the "ins" and "outs" of the Tax Credit, but it is wise to learn about it early in the adoption journey so you can appropriately document your adoption expenses.
For those of you who are interested in reading the portion of the Health Care Bill that deals with the tax credit you can go here and read on page 903. If you want a free, crash course on the Adoption Tax Credit you can go to Adoption Learning Partners and take a brief class to help you understand the general principles behind the Tax Credit (there is a $25 charge only if you request the certificate of completion).
We are Adoption Professionals, not Tax Professionals, so please consult with a Tax Professional to help you wade through your specific situation to take advantage of the money available to you.