« Ind. Gov't. - "Don't drive Marion County Library patrons away" ILB observations | Main | Sports Law - "Lawyers will be the stars as NFL labor battle goes back in session; Owners and players turn to star lawyers to argue case in appellate court today" »

Thursday, June 02, 2011

Law - "Federal Adoption Tax Credit Accounts For Huge Refunds"

A story from Blake Ellis at 6News begins:

NEW YORK (CNNMoney) -- Tina and Kenny Thomas filed their taxes in February and are still waiting for their refund.

The Thomas's are expecting a whopping $65,000 check from the IRS this year, thanks to the adoption tax credit they claimed after adopting five special needs children from foster care over the past few years.

More from the lengthy story:
Thousands of other Americans who adopted children over the last five years and filed for the adoption credit are in limbo as well, waiting for similarly large sums from the IRS. The adoption tax credit gives parents who adopt children as much as $13,170 per child -- up from a cap of $12,150 last year. And this is the first year the credit is refundable, meaning the money goes directly into a qualifying taxpayer's pocket, rather than being applied to future taxes owed.

That's especially helpful for lower income families because they get the cash even if they don't owe any taxes.

A typical private adoption runs about $30,000, so the credit was intended to help families by reimbursing expenses, such as court fees. Parents who adopt "special needs" children, however, can receive the entire credit even if they had no expenses.

But because of the huge amounts of money adoptive parents are claiming this year, the IRS is being extra vigilant before it doles out thousands of dollars. * * *

In its latest report on the tax filing season, the Treasury Inspector for Tax Administration found that, by the end of April, the IRS had received returns from 72,656 taxpayers claiming more than $897 million in adoption credits. About 58% of those claims were sent for further review, and will be audited to verify that proper documentation was submitted and that the amount of money being claimed is correct.

Posted by Marcia Oddi on June 2, 2011 02:46 PM
Posted to General Law Related