When considering pursuing an adoption, there are many things to look into. Among some of the factors a person might consider may be whether or not to seek an open adoption, adopting a child from abroad, or whether to adopt an older child. However, another factor to keep in mind may be the adoption tax credit.
The adoption tax credit may help many Pennsylvania residents with covering the costs of an adoption. In 2011, the tax credit was refundable up to an amount of $13,360 per child. This means that if a person's tax bill was less than the tax credit, then they were able to receive additional money from the U.S. government to cover the difference.
In 2012, though, the adoption tax credit became merely a deduction, although that can still prove to be of substantial benefit. This deduction is allowable up to an amount of $12,650, and any amount that is unused may be applied to offset income taxes through 2017. Unfortunately, though, even this deduction is set to expire by the end of the year, leading many across the nation to try to hurry the adoption process along.
Part of the reason behind the existence of the adoption tax credit is simply the huge cost associated with an adoption, running at $25,000 or even more. However, legislative action is pending to ensure that the tax credit is extended, although it cannot be said for certain that the action will be successful. Yet no matter what ultimately happens, Pennsylvania residents thinking about an adoption may benefit by becoming familiar with any tax laws and regulations that may be helpful as they pursue their dream of adding to their family.
Source: The Huffington Post, "With Adoption Tax Credit Due To Expire, Families Race To Adopt By Year's End," Amy Feldman, April 24, 2012