GREAT NEWS FOR COUPLES WHO WANT TO ADOPT CHILDREN!

Many couples who want to adopt children wonder how they could possibly afford to pay the expenses related to adoption. If this describes your situation, read on!

Recent health care reform legislation has expanded and enhanced the Adoption Tax Credit by increasing the related credit from $12,150 to $13,170 per eligible child. The Adoption Tax Credit has also been extended through 2011.  Finally, the Adoption Tax Credit is now refundable.

Thanks in part to health care reform, adoptive parents can now get a refund for reasonable expenses related to an adoption.  This is exciting news, because in prior years, the credit was non-refundable and based on actual tax liability.  Now, even if a family owes no taxes, they can still receive a refund at tax time based on actual adoption expenses paid per eligible child.

Taxpayers who adopt a special needs child can claim the full amount of the adoption credit without regard to the actual expenses paid in the year the adoption becomes final.

To apply for the adoption tax credit, click here for Form 8839.  Please note that this version of the form is for Tax Year 2009 is still useful if you plan to amend your 2009 tax return.  Information for the tax year 2010 will be updated as soon as it is available from the Internal Revenue Service. Click here for the IRS Adoption Tax Credit information bulletin.

For more information about eligible expenses and income guidelines for this tax credit, families are encouraged to contact their personal tax advisor.