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Family Scores $54,000 Tax Refund From Adoptions. Will You?
Sometimes, good news comes out of the tax prep office.
David and Thelma Ward could hardly believe it when their HR Block tax preparer called to say they’d be getting a $54,000 tax refund this year.
Yes, that many zeros. And math was checked countless times.
The one-time windfall for the family is attributed to a change in the tax law this year. Since 1997, families who adopt have been eligible for a one-time, $13,170 tax credit per child. Over the past three years through foster care, the Wards added five more kids to their family, which already included seven other children.
What makes this year different, though, is a change in the way the tax credit is defined: it’s now a refundable tax credit. Before, you could only fully benefit from a tax credit if you owed more than the credit. The credits simply offset what you owed in taxes. Staring this year, the adoption tax credit is refundable, meaning it not only offsets the amount you owe but you get the difference in cash.
Since, like the majority of families who adopt in the U.S., the Wards earned a low-to-modest income. They lived off of $39,000 per year, plus monthly stipends for foster care parents, so the credits never paid off. Instead, they rolled over from one year to the next. This year, with the changed law, they get to collect on all the adoptions of the last five years. The credits have a five-year shelf-life and are intended for expenses incurred through international and private adoption. Foster care adoptions don’t typically accrue expenses, but children deemed special needs make their families eligible for the entire credit.
How great for this family! Of course, they’re not in it for the money. They had no idea they’d be getting such a windfall. The refundable credit, which is part of healthcare reform, will likely help other families, too.
Photo: Maulleigh via flickr
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4 Comments
Peach commented on Apr 03 11 at 9:50 amI am not convinced that the tax credit is really helping the children who languish in foster care, when it can be applied for private adoptions or adoption attempts.
http://www.PeachNeitherHereNorThere.blogspot.com
Claudia Corrigan D'Arcy commented on Apr 07 11 at 8:03 pmWhat saddens me about this?
A great majority of women relinquish their children to adoption because of finalacial concerns. They don;t know how they are goining to afford the hospital and birth expenses. They don’t know how they are going to stay home with their child and pay their bills. They don’t know how long it will take until they are getting the child support they need to survive.
Now imagine if they could also have $13,170 returned to them at tax time? For many people, that’s almost enough to live off of. For others it would be the reassurance that they COULD pay off bills, pay off the hospital, rack of the credit card for necessitites and then pay it off.
For MANY women it would mean that adoption does not NEED to be an option, becasue no matter how much we WANT to think that that these poor babies are so unwanted, no woman treally WANTS to give up her baby. They feel they have to.
It’s very unfair that this tax credit is only given to adoptive families. This tax credit helps spearate mothers and children and is unjust.Claudia Corrigan D’Arcy
http://musingsofthelame.com
Madeline Holler commented on Apr 08 11 at 12:55 pmFair point, CCD, but important to note: this is a one-time refundable tax credit. Now, let’s talk about making the child tax credit refundable. THEN! There’s progress for the women you’re writing about.
Todd Smith commented on Jun 28 11 at 9:33 amabout the tax refund. my wife and i have adopted 4 teens all special needs. if the refund went to the birth parents of these boys the money would have been spent on them selves. every one of the mothers are drug addicts prostitutes or have some sort of mental illness. so i assure you that the money would not have been used on these children. not even a dime. although im sure there are a handfull of parents out there that could keep there babies if the money was available but would have to be controled by an agency which would then cost additional moneys again and would inn the end be just another waste of tax money. our adopted kids are now late teens and in treatment , and now it is a cost to us . we get no help now financaly. so this will help our kids get the treatment they need with out bank rupting our family. but because we love these boys with or with out the tax refund we stand by them. we did not do thes five years ago for the money. had no idea of a refund coming in the future but are so thankfull of it this year.
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