$13,000 Adoption Tax Credit Still Available, Offers Even Bigger Return For Parents

Last year a large number of U.S. families who have adopted a child were met with a surprise adoption credit and this year that credit is back, allowing anyone who has adopted a child in the last six years to claim a $13,360 tax credit, an increase of $190 compared to last year.

While the adoption credit has been available since 1997 it was originally a non-refundable credit which in turn meant it would offset any taxes owed and the rest would carry over until the next year with no extra credit given.

As part of President Obama’s Affordable Care Act of 2010 that credit became refundable with money going directly into a taxpayer’s pocket.

The credit has been largely seen as a “godsend” for families who have adopted special needs children. While some families who adopt special needs children are able to receive a refund for adoption expenses the $13,360 refund ensures that money is available to help with a child’s care.

In the meantime tax experts warn that claiming the credit will likely mean an IRS audit since the refund is so large and could be abused by non-child adopting taxpayers. In fact the Government Accountability Office found that “considerable” delays have been witnessed because of the high level of audits surrounding adoption refund requests. The agency says 68% of nearly 100,000 returns featuring the credit were audited but only 17% required that taxpayers make larger payments then originally anticipated.

In the meantime IRS officials have updated the information on its website this year to make sure all required forms are completed and sent in.

The Adoption Tax Credit is only valid for parents who adopted a baby that is already a U.S. citizen. Looks like Angelina Jolie and Brad Pitt are out of luck.