There's a federal adoption tax credit this year that is giving parents of adoptive children money that they may not have realized that they were eligible for. CNN Money reports that parents are eligible to receive a one-time tax credit of $13,170 for each child that they adopt.
This adoption tax credit has been around since 1997. However, this tax season is the first time that the federal tax credit is refundable, which means that families can collect the money even if they owe no taxes. The adoption tax credit used to be non-refundable and would only offset taxes that the adoptive parents owe.
The purpose of the federal adoption tax credit is to help families out with the cost of adoption and reimburse them for certain expenses like court fees. CNN reported that a typical private adoption can cost about $30,000. However, adopting a child out of foster care or adopting a “special needs” child can often cost no money at all. In these cases, now the adoptive parents can still receive the entire credit, even if they have no expenses.
Some families with newly adopted children are about to find life just a little bit easier with the extra money. One Alabama couple, for example, recently adopted five kids from foster care and they’re now expecting a check for $54,000 because of the credit. The couple had no idea that they would be getting this much money until they consulted with their tax preparer.
Perhaps the newly refundable tax credit will encourage more people in Arizona to expand their families and adopt. More information about the costs of adoption can be found through our Related Resource pages.