Last night our adoption support group at our church met with a CPA to talk about all the tax hoopla that is going on. Randy and I knowing that the refundability ends in 2011 and we will not have our adoption finished by then were really bummed that we would not get any of the adoption tax credit. Well we were WRONG!!! The way the CPA explained it, after the refundabilty expires, the tax credit will go back to how it used to be. Meaning you can still take it just not all at once. It has to be stretched out over years until you reach the $13,170 maximum for your adoption.
Whatever your tax liability is, the # on line 60 of your 1040 is your tax liability to the government. Say it is $4,000 that year, well, you get to take $4,000 of the adoption tax credit that year, so basically you do not owe the government at all that year. If you over paid, you get it all back. I owe $4,000, I paid in $7,000 I get all $7,000 back. That would take $4,000 off the $13,170 of the credit, and I can roll $9,170 to next year, and so on. Now you used to be able to roll it over for 4 years. He did not know what the new numbers will be, but guessed that it would be between 3-4 years after the refundability expires. So even though you don't get it all at once, you do get it over a time period. We were very excited about this, because we were told that unless you actually owed the government money you wouldn't get anything. So this is a huge bonus! I hope this wasn't confusing to anyone, I tried to explain it as best as I can. There are also income guidelines, you get the credit as long as you make less than $182,500 and then it is phased out to $222,500 after that there is no adoption tax credit available. This figure is for married couples only. Don't know the numbers for singles.
Sorry for the boring post, but I know there are probably a lot of people out there who won't finish their adoption before the end of the year, and was maybe a little confused about this also. I know we were!
Time to catch up!
42 minutes ago