UPDATE FROM THE VOICE FOR ADOPTION: Please note that since VFA’s original notice on the status of the credit (this January) we have learned that for 2013 the amount will be a maximum of $12,970. We also believe the credit does not have a carry forward limitation, like in prior years (previously restricted to 5 years forward). We are unsure if 2012 is limited to 5 years of credit carry forward and won’t know this information until IRS releases clarification later this year.
Last night, Congress passed the American Taxpayer Relief Act of 2012 (H.R. 8). The bill included a “permanent” extension of the adoption tax credit, unfortunately without refundability. The credit was permanently extended along with a number of other tax provisions from the 2001 EGTRRA bill (Economic Growth and Tax Relief Reconciliation Act of 2001). The bill made the adoption tax credit permanent, extending the credit as it was in 2001. However, the credit will not be refundable.
Here is a summary from the Finance Committee:
Permanently extend the increased adoption tax credit and the adoption assistance programs exclusion. Taxpayers that adopt children can receive a tax credit for qualified adoption expenses. A taxpayer may also exclude from income adoption expenses paid by an employer. The EGTRRA increased the credit from $5,000 to $10,000, and provided a $10,000 income exclusion for employer-assistance programs. The Patient Protection and Affordable Care Act of 2010 extended these benefits to 2011 and made the credit refundable. The bill extends for taxable years beginning after December 31, 2012, the increased adoption credit amount and the exclusion for employer-assistance programs as enacted in EGTRRA.
This is a major victory for adoption, and thanks to everyone who worked to make this happen! Again, grateful thanks to those whose efforts brought this to a successful conclusion on behalf of children needing families. Happy New Year!