January 7, 2013 @ 9:25 AM


By the adoption101.com staff

Big news for adoptive parents...

Congress passed the passed the American Taxpayer Relief Act of 2012 (the "fiscal cliff" deal) on January 1, 2013, and it was signed into law by President Obama the following day. Part of the new law is the extension of the federal Adoption Tax Credit.

And more good news...

In past years, the Adoption Tax Credit always had a sunset provision, where it expired within a yeor two, requiring it to be passed again by Congress (leading us the the recent worry if the tax credit would be extended into 2013). The bill which just past made the Adoption Tax Credit permanent. Yes, permanent, so absent some major legislative change in the future, it is here to stay, with no more worries about if an adoption will be completed before the tax credit expires.

The details of the Adoption Tax Credit have not been determined due to the rush of the fiscal cliff negotiations. Specifically, the amount of the credit, and the income levels, have not been announced by the IRS. However, it is anticipated that the figures will be very close to those of 2012: a $12,650 tax credit with a modified adjusted gross income of not more than $189,710, with the credit diminishing as one's income reaches the cap of $229,710. It was also determined that if the adopted child is special needs, the credit can be taken without any expenses actually being incurred, as is required in the adoption of a child without special needs.

As was the case previously, the credit will be applicable to domestic independent adoptions, agency adoptions, and international adoptions. One benefit of the credit which existed in 2010 and 2011 was that the credit was refundable. The credit will no longer be refundable for 2013 and future years, but just the renewal of the credit has the adoption world celebrating. (For a full explanation the "refundable" aspects, or lack thereor, please see our more detailed article within our adoption101.com site.)