Family Scores $54,000 Tax Refund From Adoptions
Sometimes, good news comes out of the tax prep office.
Yes, that many zeros. And math was checked countless times.
The one-time windfall for the family is attributed to a change in the tax law this year. Since 1997, families who adopt have been eligible for a one-time, $13,170 tax credit per child. Over the past three years through foster care, the Wards added five more kids to their family, which already included seven other children.
What makes this year different, though, is a change in the way the tax credit is defined: it’s now a refundable tax credit. Before, you could only fully benefit from a tax credit if you owed more than the credit. The credits simply offset what you owed in taxes. Staring this year, the adoption tax credit is refundable, meaning it not only offsets the amount you owe but you get the difference in cash.
Since, like the majority of families who adopt in the U.S., the Wards earned a low-to-modest income. They lived off of $39,000 per year, plus monthly stipends for foster care parents, so the credits never paid off. Instead, they rolled over from one year to the next. This year, with the changed law, they get to collect on all the adoptions of the last five years. The credits have a five-year shelf-life and are intended for expenses incurred through international and private adoption. Foster care adoptions don’t typically accrue expenses, but children deemed special needs make their families eligible for the entire credit.
How great for this family! Of course, they’re not in it for the money. They had no idea they’d be getting such a windfall. The refundable credit, which is part of healthcare reform, will likely help other families, too.
No comments:
Post a Comment