OK guys, it’s now or never. As you know, I’ve been fairly quiet about all the petitions and requests for action on the adoption tax credit that have been circulating. There was logic to my reticence– I wanted to save whatever “fire power” I had for when it really mattered, and now is that time. I’m only asking for a small effort, but the combination of many small efforts will make the difference in the future of this very important tax credit.
The Adoption Tax Credit, as we know and love it, will expire on Dec. 31, 2012. Last Friday, September 21, at long last, a good bipartisan Senate bill (S. 3616) on the adoption tax credit was introduced by Senators Landrieu (D-LA), Blunt (R-MO), Hutchison (R-TX), and Cardin (D-MD.) A strong House bill (HR 4373) was introduced in April 2012 (thank you Representative Rep. Bruce Braley (D-IA) and all the cosponsors), but we’ve been waiting for a bipartisan Senate companion bill. Now that we have it, it is time to take action.
Adoption Tax Credit for 2012
For calendar year 2012, the maximum adoption tax credit available is $12,650, which is a slight bit less than in 2010 or 2011. It applies to all types of adoption— foster care, international, or private domestic. (The adoption tax credit in the past and with any of the proposed legislation is not available for stepparent adoptions and embryo donation, which some folks call embryo adoption.) The adoption tax credit for 2012 is not refundable, which means that only families who owe federal income tax can receive the credit. The bottom line is that many lower and moderate income families will not benefit from the adoption tax credit, or will receive only a portion of their credit.
What Will Happen to the Adoption Tax Credit in 2013 Without Action?
As of January 1, 2013, the adoption tax credit will not go away completely, but will be greatly reduced and will be available to only a very few. Unless something changes, the adoption tax credit in 2013 will be a $6,000 nonrefundable credit for authorized expenses for special needs adoptions from foster care only. Most of the adoptions from foster care do not have any upfront expenses, so very few families who adopt from foster care will receive any refund. Those adopting internationally or privately will not receive a tax credit at all.
What Will the Proposed Adoption Tax Credit Legislation (H.R. 4373 and S. 3616) Do?
There are number of proposed bills in Congress addressing the adoption tax credit, but the ones I am urging you to support (H.R. 4373 and S. 3616) offer the best benefits to all adoptive families. Under these bill, the adoption tax credit:
- Will max out at $13,360 (indexed for inflation).
- Will be refundable
- Applies to all types of adoption (private domestic, foster care, international)
- Applies fully to special needs adoption from US foster care, regardless of expenses.
- Becomes a permanent part of tax law (So we don’t have to go through all this panic every time we reach the sunset date.)
S. 3616 would also ask the IRS to implement several processing reforms suggested by a Government Accountability Office (GAO) report on the adoption tax credit. Anyone who has experienced the hassle of applying for this credit (see the 700+ comments on only one of my many blogs on this credit) will appreciate this addition.
What We Need You to Do
We only need one thing, but that one thing is very very important: Send an email (or if you are particularly industrious–a letter) to your House Representative (you have one) and both of your state Senators (you have two). You can also give them a call or schedule a visit, but the easiest thing to do is to draft one letter and email it (with a few very minor changes) to all three officials. Don’t bother to contact Representative from other districts or Senators from other states. Not to be harsh, but you can’t vote for them, and they don’t really care what you think. Your Representative and Senators, on the other hand, care very much.
To find your Representative and Senators and to get their email address (or mail address or telephone number) is amazingly easy.
- For your Representative, go to Find Your Representative and type in your zip code. (If you live in a bigger city you might also have to give your address.) Click on your Representatives name and you will be taken to their website. Then look for the contact information and zip them off an email.
- For your Senators, go to the main Senate page. At the top right hand corner, there is a box labeled Find Your Senator. Click on your state, and then go to the websites for each of your senators, and find their contact info.
Your letter should ask for one thing—you would very much appreciate your Representative to cosponsor H.R. 4373, and your Senators to cosponsor S. 3616. (Your House Representative can only cosponsor bills beginning with H.R., and Senators can only cosponsor bills beginning with S.) It seems less a part of a mass impersonal campaign, and thus, I think carries more weight. The only info you need in the email is the request to co-sponsor the specific bill, and a brief heart-felt reason why the adoption tax credit is important to you. Has it helped you in the past? Might it help you in the future? Would it have helped you? Make sure you include your name and address, so they know you are legit. That’s it– Democracy In Action.
How the Adoption Tax Credit Renewal is Likely to Come Down
For better or for worse, the adoption tax credit is expiring the same year as a national presidential and congressional election, and the same year our esteemed leaders have lead our country to the brink of the fiscal cliff. (If you have been hiding under a rock and are fortunate to not know about this looming abyss, just Google the phrase “fiscal cliff”. Like it or not, the lowly, humble adoption tax credit it tied up in all of this.
The Adoption Tax Credit Working Group and our various lobbyist and political gurus believe that the any action on the adoption tax credit is likely to be a part of the passage of some form of extension for the Bush era tax cuts or other major fiscal/debt/tax reform packages that will be coming down the pike after the election. Some in congress want to extend all the Bush era tax cuts for everyone; some want to extend most of them, but only for families making less than $250,000 a year; some want to reform the tax code, with or without the Bush era tax cuts; and nearly everyone agrees that tax cuts or tax reform cannot be allowed to increase the national debt any further. The adoption tax credit is part of that big murky mix.
It is highly unlikely that there will ever be a separate vote on the adoption tax credit, which is part of the reason why we have to try to build the co-sponsorship list now for H.R. 4373 and S. 3616. How strongly these bills are supported will make the difference in how seriously Congress considers the adoption tax credit when (if ?) they are hammering out a tax plan in the wee hours of 2012.
Stay Informed on the Adoption Tax Credit
- Sign up for the Creating a Family weekly newsletter at the top right of this page. That will be our primary means of keeping you informed on what is happening and what you can do.
- “Like” the Save the Adoption Credit Facebook page.
- The Creating a Family Adoption Tax Credit page has everything you might ever want to know (how’s that for hyperbole?!?) on this credit, including tips for avoiding delays when applying for the credit in 2012 and a FAQ page.
- The Adoption Tax Credit Working Group site is also terrific, and has a great FAQ page.
P.S. Although not specific to the Adoption Tax Credit, I would also encourage you to join the Creating a Family Facebook Support Group. It is a friendly, supportive, and very active group, and a safe place to ask questions, vent, or simply chat about all things, including what is happening with this credit.
Image credit: Shrieking Tree
Add Your Comment
To renew the Adoption Tax Credit in it’s current form actually will HURT the very children it’s pretends to help. It will PREVENT children from foster care being adopted. While the original adoption tax credit was created to benefit the adoptions of special needs children, successful lobbying from adoptive parents and the adoption lobbyists have increased the credit by both the amount refunded and the range of adoptions covered. The Adoption Tax Credit now applies to domestic and international adoptions. Letting people use the credit to adopt in an otherwise competitive market does not help children in foster care. it helps the adoption industry. Historically, as the adoption tax credit went up, so do the adoption fees. In other words, the US government subsidizes the adoption industry this way through the Adoption Tax Credit.” ~Claudia Corrigan D’Arcy”http://www.musingsofthelame.com/2012/09/whats-wrong-with-adoption-tax-credit.html
Thanks for this post! I sent both my senators and rep an email about this a few weeks ago. I’m happy to say I got a personalized reply from each one. I will have my husband contact them as well.
I’ve heard from a couple of people who’ve already received a personal response back from their representative and senators. I know reading about legislation can be boring, and that it is easy to put off sending an email, but I’ve done my best to explain the adoption tax credit in an interesting (as possible) way and to simplify what we need you to do. Please help by at least reading this blog, and if inspired share the link (and send your congresspeople an email). I promise it’ll take no more than 10 minutes (OK, 15 max).
I don’t think people will lose the credit if their tax liability is less than the credit. The past non-refundable adoption credit was able to be credited forward to future years to offset tax liability. For our first adoption, we did not have to pay in federal tax for over 2 years because we had a large carry forward. If you don’t pay in any federal tax because you know you are entitled to the credit in a future, it’s just like getting a refund on a monthly basis. I doubt they are going to take that away but then I have not been able to document that part of the bill.
Leslie, I tried to find this out as well and it wasn’t clear to me either. If anyone has heard definitively, let us know.
Thanks for the reminder! We’ll be sending our letters in for sure.