ADOPTION TAX CREDIT INFORMATION

1. Since 2003, families who adopted a U.S. child with special needs from foster care could claim a federal adoption tax credit even if they had no adoption expenses (as long as they met the fairly generous income requirements).

2. Children who receive adoption assistance/subsidy benefits are considered children with special needs. Even families who receive a deferred subsidy ($0 per month but medical coverage through the subsidy program) are eligible.

3. All adoptive families (except those who adopted a step-child) are eligible for the credit, but those who adopt children other than those with special needs must have—and be able to document, if requested by the IRS— qualified adoption expenses.

4. For 2010 and 2011 the credit was made refundable. If parents who adopted as long ago as 2005 had credit to carry forward into 2010, that amount of the credit also became refundable. In 2010 and 2011, parents can claim the credit even if they don’t have income or any tax liability.

5. The amount of the credit for 2011 is $13,360 per child.

IRS INSTRUCTIONS, FORMS AND FAQS

• IRS Form 8839 Instructions: http://www.irs.gov/pub/irs-pdf/i8839.pdf

• IRS Form 8839: http://www.irs.gov/pub/irs-pdf/f8839.pdf

• IRS – adoption tax credit FAQ’s: http://www.irs.gov/individuals/article/0,,id=231663,00.html