Ok, I kept hearing about this great tax credit for adoption but did not fully understand how it worked.  I am smart enough to know that most people do not get more back than they paid unless they qualify for the child credit but one agency I looked into advertised that their expense was around 20,000 minus the 11,800 credit(this was last year or the year before) resulting in a total adoption expense of 9,200.  I thought how can that be?  Then everyone kept telling me that no on a tax credit you can get back extra money that you would not normally get.  I know people who are actually expecting to get back 10,000 for buying a new house.  I allowed myself to get my hopes up only to get the actual figures back from the accountant and to of course be dissappointed.  Our 12,500 tax credit actually amounted to about twelve hundred dollars.  Who does this tax credit actually help?  The people I know who are trying to adopt do not make that much money and therefore do not normally owe that much tax.  These are the people who really need help with the adoption expenses.  Is there anyone out there that the adoption credit made a significant difference in their lives?  I was hoping if we got a lot back we would have a jumpstart on our next adoption.  1200.00 will barily cover homestudy expenses.  Out of the whole adoption process I have been more discouraged by the expense than anything else.  I do not care one bit that our son is not biologically ours.  I actually look forward to having his birthmom in our family and am probably seeking a closer relationship than she wants right now.  I am sometimes sadden by the thought that I will never know what it feels like to have a baby kick in my stomach but then I remember I also never have to know what labor feels like and I get over it.  But the fact that the average adoption is 35,000.00 is something that I am having trouble getting over.  Ihave already complained to my mother, my mom in-law, and my best friend and I know they are all thinking I’m being a witch.  Frankly, right now I’m feeling a little witchy so I hope I have not stepped on anyones toes but I needed to get this out,

I hope I am understanding your post correctly - please let me know if I misunderstood.
The federal tax credit is payed out over FIVE YEARS.  The amount you get back each year is dependent on how much you had taxes withheld on you and your husband’s paychecks.  I know it took 4 years or so to get back the entire amount with our family.
People have been told wrongly if they thought they’d get back the entire amount the first time they used it on their taxes.  It’s nice to eventually get the money back but it is a long drawn out process.  For our first adoption, my son was born in Aug ‘02 - but it wasn’t finalized until Feb. ‘03.  So we couldn’t use it toward our taxes til we did our ‘03 taxes in ‘04!  So that mean my son was 1 1/2 years old before we saw ANY of that tax credit.  Man, that was annoying - especially since we were already starting the process for kid #2. 

It’s fine to be annoyed by all of this.  It stinks that this adoption route costs so much.  It’s so worth every penny but it’s annoying to write those checks!

We filed our taxes this year with the adoption tax credit. After all of our deductions and credits we received a refund of over $10,000, with the remainder of the credit to be applied towards next year’s returns. We are a family that typically pays the government every year, so we had a lot of tax to apply this credit towards. My understanding is that if you do not pay a lot of taxes, it can take up to the entire 5 years to get the full credit, and you might lose out on some of it. I have been told that with the adoption tax credit extension that has recently been approved, this credit is now “refundable” meaning that anything above what you paid in taxes will be issued as a refund check that same year. If true this doesn’t help anyone filing this year, but should be a big help to future adoptive families.

if you adopt from foster care, most all of your expenses are paid anyway. and you still get some credit.

Hello:

I just wanted to help clarify some information now available about the Federal Adoption Tax Credit.

I am not an accountant, but from my understanding, the amount is now fully refundable (in one check) minus the amount of taxes you owe. This means, similar to the Homebuyer tax credit, that you do your taxes, any remainder you owe the gov’t (if any) is taken out, and then the ENTIRE amount of the Adoption Tax Credit (minus any taxes you owed) is mailed to you as a check. So in order to get the full amount of the tax credit you want to make sure you’re not going to owe a lot at the end of the year (i.e. your job is taking enough out, or you are setting extra aside). There is no portion of this that involves paying out over five years.

See bullets below for more:

• The current adoption tax credit has been extended until the end of 2011;

• The value of the adoption tax credit has been increased from $12,170 to $13,170.

• The increase is “retroactive,” meaning that any adoption occurring after January 1, 2010 is eligible for this higher credit.

• The credit is now refundable.  This means that even families that owe zero taxes can receive the full tax credit in the form of a tax refund to help with their adoption-related expenses.

Here is the actual text of the changes on the Federal Adoption Tax Credit, most notably the amount increase and the credit being made refundable.

H. R. 3590—903
SEC. 10909. EXPANSION OF ADOPTION CREDIT AND ADOPTION ASSISTANCE
PROGRAMS.
(a) INCREASE IN DOLLAR LIMITATION.—
(1) ADOPTION CREDIT.—
(A) IN GENERAL.—Paragraph (1) of section 23(b) of
the Internal Revenue Code of 1986 (relating to dollar
limitation) is amended by striking ‘‘$10,000’’ and inserting
‘‘$13,170’’.
(B) CHILD WITH SPECIAL NEEDS.—Paragraph (3) of section
23(a) of such Code (relating to $10,000 credit for adoption
of child with special needs regardless of expenses)
is amended—
(i) in the text by striking ‘‘$10,000’’ and inserting
‘‘$13,170’’, and
(ii) in the heading by striking ‘‘$10,000’’ and
inserting ‘‘$13,170’’.
(C) CONFORMING AMENDMENT TO INFLATION ADJUSTMENT.—
Subsection (h) of section 23 of such Code (relating
to adjustments for inflation) is amended to read as follows:
‘‘(h) ADJUSTMENTS FOR INFLATION.—
‘‘(1) DOLLAR LIMITATIONS.—In the case of a taxable year
beginning after December 31, 2010, each of the dollar amounts
in subsections (a)(3) and (b)(1) shall be increased by an amount
equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting ‘calendar year
2009’ for ‘calendar year 1992’ in subparagraph (B) thereof.
If any amount as increased under the preceding sentence is
not a multiple of $10, such amount shall be rounded to the
nearest multiple of $10.
‘‘(2) INCOME LIMITATION.—In the case of a taxable year
beginning after December 31, 2002, the dollar amount in subsection
(b)(2)(A)(i) shall be increased by an amount equal to—

H. R. 3590—904

‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting ‘calendar year
2001’ for ‘calendar year 1992’ in subparagraph (B) thereof.
If any amount as increased under the preceding sentence is
not a multiple of $10, such amount shall be rounded to the
nearest multiple of $10.’’.
(2) ADOPTION ASSISTANCE PROGRAMS.—
(A) IN GENERAL.—Paragraph (1) of section 137(b) of
the Internal Revenue Code of 1986 (relating to dollar
limitation) is amended by striking ‘‘$10,000’’ and inserting
‘‘$13,170’’.
(B) CHILD WITH SPECIAL NEEDS.—Paragraph (2) of section
137(a) of such Code (relating to $10,000 exclusion
for adoption of child with special needs regardless of
expenses) is amended—
(i) in the text by striking ‘‘$10,000’’ and inserting
‘‘$13,170’’, and
(ii) in the heading by striking ‘‘$10,000’’ and
inserting ‘‘$13,170’’.
(C) CONFORMING AMENDMENT TO INFLATION ADJUSTMENT.—
Subsection (f) of section 137 of such Code (relating
to adjustments for inflation) is amended to read as follows:
‘‘(f) ADJUSTMENTS FOR INFLATION.—
‘‘(1) DOLLAR LIMITATIONS.—In the case of a taxable year
beginning after December 31, 2010, each of the dollar amounts
in subsections (a)(2) and (b)(1) shall be increased by an amount
equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting ‘calendar year
2009’ for ‘calendar year 1992’ in subparagraph (B) thereof.
If any amount as increased under the preceding sentence is
not a multiple of $10, such amount shall be rounded to the
nearest multiple of $10.
‘‘(2) INCOME LIMITATION.—In the case of a taxable year
beginning after December 31, 2002, the dollar amount in subsection
(b)(2)(A) shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting ‘calendar year
2001’ for ‘calendar year 1992’ in subparagraph thereof.
If any amount as increased under the preceding sentence is
not a multiple of $10, such amount shall be rounded to the
nearest multiple of $10.’’.
(b) CREDIT MADE REFUNDABLE.—
(1) CREDIT MOVED TO SUBPART RELATING TO REFUNDABLE
CREDITS.—The Internal Revenue Code of 1986 is amended—
(A) by redesignating section 23, as amended by subsection
(a), as section 36C, and
(B) by moving section 36C (as so redesignated) from
subpart A of part IV of subchapter A of chapter 1 to
the location immediately before section 37 in subpart C
of part IV of subchapter A of chapter 1.

Here’s an idea of the fees for international adoptions:

http://www.spence-chapin.org/adoption-programs/b3c_fees.php

Keep in mind each county has a different scale.

is this tax credit for only one child? we adopted two. wondering if we would get it doubled, or do one one year, and the other the next year