The 2011 Adoption Tax Credit

The US tax law provides for a tax credit to taxpayers who adopt a child. The adoption costs in America can be quite high and the credit seeks to assist individuals seeking to adopt a child or children by covering part of these costs. In 2011, the Adoption tax credit has been adjusted and is now more favourable for those seeking to adopt. Below are the rules that apply to the qualification of this credit;
Refundable
For 2011, the Adoption Tax Credit is refundable. This means that you can get a refund check for the credit if you do not have any due taxes.
Income and Credit limits
For 2011, the limit of the amount of credit that you can claim has been increased to $ 13,360 per child. The amount of tax credit that you can claim depends on the actual costs incurred towards the adoption. However, for special need children, one can claim the maximum amount without having incurred equivalent costs.
The maximum amount of credit is available for taxpayers who earned an Adjusted Gross Income (AGI) of $185,210 and below in 2011. Taxpayers who earned above this limit can claim a lower amount. However, taxpayers who earned an AGI above $225,210 in 2011 are not eligible for this tax credit.
Eligibility of Child Being Adopted
The Adoption Tax Credit is available for the adoption of children who are below the age of 18 years. The credit is also available for adopting individuals who are physically or mentally challenged to the extent that they cannot care for themselves.
Filing to Make Claim
To claim the Adoption Tax Credit, one needs to file paper as opposed to electronic returns. You can still use Free File to prepare your tax returns but you will need to print the return and send the hard copy to the IRS. You will need to attach Form 8839, Qualifying Adoption Expenses form that indicated the expenses being claimed for the adoption. You will also need to attach supporting documentation for the adoption. The support documentation includes;
Expense receipts for the adoptionThe final adoption decreeA state determination providing that the child being adopted is needyVarious court documents relating to the adoptionPlacement agreement from a qualifying agent
Claimable Expenses
A taxpayer is allowed to claim all expenses that are reasonable and necessary to facilitate the adoption. Some of these expenses include;
Attorney fees and expensesThe adoption feesTravel and relocation expensesCourt costs