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The Adoption Tax Credit

Written by Gardale Hatley on Wednesday, 19 December 2012. Posted in Adoption, Palmore Hatley Blog

Two bills related to the lapsing credit for adoptive parents.

Im-just-a-billWhen I receive enough questions about a given topic I start thinking it’s time for a blog post. The adoption tax credit is one such topic. The adoption tax credit was introduced in 1997 and has been available in some form or fashion ever since. Every year, at least as I can remember, we’ve gotten down to December and renewal and there has been great consternation as to whether the credit would be extended. This year is no different.

 The adoption tax credit is available for eligible families who adopt through foster care, intercountry adoption, and private domestic adoption. Over the years, the rules of the credit have changed. Before 2010, the credit could be carried forward over multiple years, in 2010 the credit was made refundable, allowing families to receive the full benefit during a single tax year regardless of taxes due that year.

In 2012, the credit amount decreased to $12,650 and was no longer refundable, eliminating the availability of the credit to some lower to moderate income families without tax consequences.

The current adoption tax credit will end December 31, 2012. Should the credit lapse, the tax benefit will fall to $6,000 and be available only for those who adopted a child that is considered “special needs.”

But there is hope…

On April 17, Rep. Bruce Braley (D-IA) introduced the "Making Adoption Affordable Act" or HR 4373. The bill would set the adoption tax credit at $13,360 and make it refundable and permanent. The bill is continually gaining bipartisan co-sponsors.

On September 21, Senators Landrieu (D-LA), Blunt (R-MO), Hutchison (R-TX), and Cardin (D-MD) introduced S. 3616. This Senate bill will make the adoption tax credit inclusive, flat for special needs adoptions, refundable, and permanent.

So there is hope in these two pieces of legislation. A wise man once said that you don't want to see what goes into making sausage or laws. He's was right. However, as developments occur we will try to keep you up to date on them. If you are so inclined you can track the progress of both bills at and .

About the Author

Gardale Hatley

Gardale Hatley

Gardale Hatley was raised in Lampasas, Texas and moved to Montgomery County more than 15 years ago. He focuses his practice primarily in Montgomery and Harris counties.

Palmore Hatley PLLC

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