Monday, March 22, 2010

Health Care Reform's Potential Impact on Adoption

As you've no doubt noticed, health care reform in the US passed a major hurdle last night. As part of the bill there are two items of importance to our community. The first is increased support for maternal health care. Healthier moms mean healthier babies! So this is good news for all concerned.

The second is this: "Expanding the Adoption Credit and Adoption Assistance Program. Increases the adoption tax credit and adoption assistance exclusion by $1,000, makes the credit refundable, and extends the credit through 2011. The enhancements are effective for tax years beginning after December 31, 2009."

While adoption from the foster care costs little to nothing, this will hopefully encourage more people to seek out adoption in the first place. It will certainly help those who are adopting dometically from non-foster care sources too. Will this help sway your choice?

4 comments:

Safe said...

This is wonderful news!!!

I did have one follow-up question - if an adoption is finalized in 2011, but you made payments toward the adoption in 2010 - will you be able to claim the 2010 payments on your 2010 taxes, or will you have to wait until your 2011 tax return?

Alexandra B said...

I don't feel qualified to hand out tax advice. The IRS' website: www.irs.gov has more information including ways to contact the IRS directly with questions. I have done so myself, via phone, and they were very helpful. (And it is free.)

The other options: to ask your tax preparer (should you have one) or most local universities offer tax assistance days for free (accounting students serve under supervision of their professors as part of a licensing requirement).

Megan Day said...

Do you know if this means for sure that the adoption tax credit will be continued through 2011, or just that it passed the first step and has to go through more steps to be finalized?
Thanks,
Megan

Alexandra B said...

According to Kay Bell on Bankrate.com, this is in effect right now:


Adoption tax credit: This is a nice tax benefit for folks looking to grow their families via adoption; this Bankrate tax tip provides details on how the adoption credit could help cut your 2009 tax bill that's due in just a few weeks.

But the credit and associated amount of income excluded from taxable income when an employer provides adoption assistance to workers was set to expire at the end of 2010.

That's no longer a problem. Health care reform extends the credit through 2011. Even better, it increases the amount of the credit and the income exclusion $1,000, making the potential 2010 credit amount $13,150. Best of all, the credit now is refundable, meaning it could get eligible adoptive parents a tax refund.


All quoted from: http://www.bankrate.com/blogs/taxes/health-care-reform-taxes.aspx