| Take Advantage of the Tax Credits for Adopting a Child |
Take Advantage of the Tax Credits for Adopting a Child
The Federal government realizes that desire people have to adopt a child is huge. They also realize it can take a financial toll on a household. That is why they offer tax credits when you adopt a child. The maximum that can be taken in the year that a child is adopted is $10,160. It is important to understand that you can take this dollar amount for each child that you adopt. It doesn't matter if you adopt a child from within your own country or you go through the International adoption process.
Sadly, sometimes a household has paid out money for adopting a child and then it doesn't materialize. For example the birth mother may change her mind to give up her baby at the last moment. Under such circumstances this tax credit can still be taken. While that doesn't make up for the loss of the child, it can help to soften the blow financially. Many people find that this tax credit allows them to have the funding the need to continue pursuing a child through the adoption process. It can be a great way to keep your finances in as good of a standing as possible.
There are some exemptions though that you need to know about when it comes to the adoption tax credit. For example if a woman gets remarried and the new husband is going to adopt her children the household isn't eligible for this tax credit. Depending on the laws in your own state, you may be eligible for some type of credit on your state tax return though of around $2,000. The specifics vary so you will need to find out what applies to your own given situation.
If you do adopt a child make sure you understand how the tax credits through the Federal government can help you. They can reduce the amount of tax you owe that given year or to increase the amount of a refund you will get from them. Make sure you ask your tax preparer if you qualify for this type of credit. Many people don't know it even exists when they are thinking about adoption. Perhaps understanding this information will help you to see you can afford to continue with the process.
The other thing to understand is that the rules for the tax credit and adopting a child are very complex. This is one of the most difficult forms to complete properly. If you are used to completing your own tax return, it is a good idea for you to have a professional do it for you this time around. That way you don't take credit you aren't eligible for and owe it back later. However, you also don't want to overlook this tax credit or end up nothing taking all that is offered to you.
For example, you would assume that you can't take up to the maximum of $10,160 when you adopt a child if the amount you spent was less than that. There are some scenarios though where you can. For example if you adopt a child with special needs then the Federal government does allow you to take that full exemption. It doesn't matter if what you spent was much less than that dollar amount in order to complete the adoption process.
Now that you do know this tax credit exists for adoption, keep track of all your expenses. You can even include the cost of travel involved and phone calls that you have to make for the adoption process. You want to have verification of the dollar amount you claim because you don't want to get audited and not have the proof that they will require. Don't be intimidated to take such a tax credit though. Instead you just want to make sure you have the right professionals on your side to walk you through all of it.
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