By Rita L. Soronen, President & CEO, Dave Thomas Foundation for Adoption
In response to the financial demands on families who step forward to adopt, particularly those who adopt special needs children, the adoption tax credit was enacted in 1996. The Small Business Job Protection Act provided the first “Adoption Assistance” tax credit for families. Since the 1996 groundbreaking legislative effort, the adoption tax credit has been increased, extended and renewed across political party lines and administrations and with significant ongoing Congressional support.
Curiously, though, the credit has not been made a permanent part of the tax code, but rather frequently has changed in amounts allowable and how it is reimbursed. For example, in 1997, families adopting a child with special needs could claim up to a nonrefundable $6,000 credit, and for all other adoptions, $5,000. In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act, which raised the adoption tax credit to $10,000 for all adoptions, while making the credit for special needs adoptions permanent. Changing again in 2010, the adoption tax credit was woven into the Health Care and Education Reconciliation Act, increasing the credit to $13,170 per eligible child and making the tax fully refundable, regardless of tax liability, for the tax years 2010 and 2011. Finally, in December 2010, the Tax Relief Act extended the refundable adoption tax credit through tax year 2012, but the amount is not yet determined.
The Dave Thomas Foundation for Adoption, with the dedicated voice of Mr. Thomas, fought for the initial adoption tax credit in order to help ensure the adoption of children waiting to be adopted from foster care. In the past 14 years, the credit has been used by tens of thousands of families, not only those who adopt from foster care, but any family who adopts. Challenges to the credit have been well-documented, from the accessibility of the credit to those families most in need - typically families adopting special needs children from foster care - to the filing confusion of the continually changing credit.
As of today, the adoption tax credit will sunset on December 31, 2012 if Congress does not renew it. If allowed to expire, after tax year 2012, the credit will revert back to the maximum of $6,000 for special needs adoptions and will eliminate the tax credit for all other adoptions.
The adoption tax credit had made adoption possible for so many families who might otherwise not be able to afford it, while providing critical support for families who adopt children with special needs. More than 107,000 children are in foster care in the United States waiting to be adopted and hundreds of thousands globally are orphaned or abandoned, victims of war, violence or famine, and simply waiting for a family of their own. This small support is vital to families who take responsibility for these children.
If you believe in the original intent of the tax credit to support families who assume both the joy and responsibility of providing a safe and permanent home for some of our most vulnerable and hurt children, then it is also important to contact your elected officials (www.senate.gov and www.house.gov) and ask that the tax credit be made permanent, refundable and flat for families who adopt children with special needs to help with their support, regardless of the expenses occurred in the adoption process.
Add your voice and assure we can continue to support families who adopt. Mr. Thomas would have said it best – “it is the right thing to do.”
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