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Essay On Adoption Tax Credit

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One of the greatest displays of love an adult can show to a child is adoption. Adults who make the decision to adopt a child are fulfilling a very important need and service to the children who need good parents. As a reward for becoming an adoptive parent, the Internal Revenue Service (IRS) offers an Adoption Tax Credit to help adoptive parents cover the expenses incurred in any given year related to the adoption process. About the Adoption Tax Credit The Adoption Tax Credit was first passed in 1996 as part of the Small Business Job Protection Act of 1996. The ATC was heavily endorsed by then US President Bill Clinton, who wanted to ease the financial burden, hoping more people would become willing to adopt. The law was passed by Congress…show more content…
Furthermore, you will be required to obtain a Adoption Tax ID Number (ATIN) for any child that does not have a Social Security number. 3. How to Calculate the Amount of Your Adoption Tax Credit - Unlike a deduction, the Adoption Tax Credit is a dollar-for-dollar reduction of your tax liability. The amount of your deduction includes any of the out-of-pocket costs paid in the categories mentioned above up to the statutory limit for each year. In most cases, receipts must be used as supporting documentation. If the adopted child qualifies as a special needs child, you will be entitled to the full statutory amount without documentation. 4. Carry Forwards - If the amount of your qualifying Adoption Tax Credit exceeds the amount of your net tax liability, the tax credit can be carried forward for up to five years. 5. Phasing Out For high income families, the Adoption Tax Credit will phase out between the current income levels of $201,010 - $241,010 where the amount of the deduction becomes zero. It's worth noting that 16 US States currently offer some type of state Adoption Tax Credit based on similar criteria. You are encouraged to check with the IRS and your state tax authority for more information related to these tax
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