Sunday, May 2, 2010

Federal Adoption Tax CREDIT

Thanks Michelle for your recent comment! It reminded me that I've been meaning to post something about the cost of adoption that I didn't understand until recently. 

In case you missed it, here is a run down of our adoption expenses (keep in mind this total is higher if you go through an agency to find a birth mom versus agreeing to adopt a baby through a family or friend): Adoption price tag

In that post I also include some links for loans, grants, etc.

The part that I want to point out is the Federal Adoption Tax Credit. The 2009 Tax Credit for adoption was $12,150. That is not a deduction friends, that is a credit. And credit is MONEY IN YOUR POCKET.

If you typically owe money for taxes, this credit would reduce what you pay. If you typically receive a tax rebate, your check will probably be higher than it has ever been before. 

I did not understand this until we did our taxes this year (even though Samuel was born in '08 since his Gotcha Day was in '09 it went on our 2009 taxes...as did Lauren's birth - crazy!).

The adoption credit was set to expire in December of this year, but the credit was extended with the new health care bill. Now it is set to expire at the end of 2011. The the current credit is $13,170. So NOW is the time to adopt if you are considering it! If you need to borrow money from a friend/family member or take out a loan to cover adoption expenses, please know that you will receive a tax credit to help pay back the money you borrowed.

I THINK I'm explaining this correctly from what I understand. If anyone has a better understanding or additional information, please share. I desperately hope that no one will rule out adoption because of the cost.

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