Adopting is a great process. You help bring someone into a new and loving home, into a life they may not be able to have before you came into your life. But even though this can be a wonderful experience, it can also be an expensive one that you will need to worry about. Coming up with the money can be one of the most difficult parts about this whole process and there are many people who wish they could adopt but who never do just because the money is too hard to get.
If you are considering adoption, or are in the middle of an adoption, it is important to learn about the adoption tax credit that you can get on your tax return in the year that the adoption is finished. This is a great way to cover at least a little bit of the adoption, if not more, in order to bring a new addition into your family and help it grow with more love. If you are interested in doing the adoption credit, talk to your tax professional and learn a bit more about this great tax credit.
What is the Adoption Credit?
The adoption credit is a great thing that you can claim on your tax return if you have gone through an adoption during the tax year. You will be able to use this to help cover some of the costs that it takes to adopt a new addition into your family. This can be a big expense in your family. Most adoptions cost a lot of money and it is not easy to take care of these high costs. In fact, there are many families who choose to not adopt because they just can’t afford the costs.
But the government does provide some relief to those who most need it during adoption. If you meet certain income guidelines, you could get a credit back to help pay for your adoption. For the 2016 tax year, the amount is around $13,600 but it does increase to keep up with the rate of inflation so double check during your adoption. This is the maximum that you are able to receive. If your adoption costs $20,000 or some other number that is higher than the maximum, you can still get the credit but the rest of the adoption costs are up to you. In addition, if your adoption costs less than the maximum amount, you can only claim that amount, and nothing more, on the tax return.
While this tax credit is pretty simple, there are bound to be some questions you have as you go through the adoption process. Don’t try to handle it on your own. Hire a tax professional who can work with you through this whole process and who will ensure that you get the most out of your tax credit possible during the year.
Who can Qualify?
Most people will qualify for this tax credit, as long as you claim the adoption during the year that it happened and you have certain income requirements. Even if you are a bit above those income requirements, you may still be able to get a portion of the tax credit to help out with the costs. Even though this is not going to be the full amount, it can still help out a bit with the adoption process.
In addition, be careful about the year that you do the adoption for the tax credit. You cannot claim this credit until the adoption is all the way complete, so do not try and claim it in the middle of the year. If the adoption is completed by December 31 of the year you will file, you can claim it. So if you want to claim the adoption on your 2015 tax return, the adoption needs to be done by the end of the month in December. But if the adoption does not finish until early January or later, you will have to claim it later for the 2016 tax return. If you are a little confused by the dates and how they pertain to your particular situation in regards to the adoption, make sure to contact your tax professional to get started.
When going through an adoption, you need to make sure that you are careful about the decisions that you make. While it is a great thing to go through an adoption, if you do not use proper planning and find the right company to work with you while watching your prices, this adoption can easily get too expensive. The tax credit is only going to go so high and everything else is your responsibility. If you spend too much, it could put a strain on your family life that just doesn’t need to be there.
Adoption is a great experience that any family can go through. Whether you are going through an adoption to have your first child or you are looking for a way to add to the family that you already have, it is a great process that is full of surprises and takes you on a new journey. But if you have gone through an adoption, you know this can be a difficult experience in terms of expenses. Let your tax professional help you go through this process so you can get your tax credit and concentrate more on your new family and less on the costs of expanding the family.
