By Jilian Mincer
Parenthood doesn’t always cost a bundle. Just ask the the Ward Family. Thelma Ward was speechless when her tax preparer said the family would receive a $54,000 refund this year, according to a story in CNNMoney.com .
Why the good news? The federal adoption tax credit. The Wards, who adopted five kids in recent years, qualified for an adoption credit for each child. According to the story, they didn’t have a high enough tax liability in the past to fully use the credits. So the credits rolled over and this year the carry forward became refundable.
According to H&R Block, in the past parents could only claim the portion of the tax credit that reduced their tax liability to zero. Unsued credits could be carried forward up to five years, but the same limitation applied each year. For 2010, it’s a “fully refundable credit for qualified expenses up to $13,170,” says H&R Block. Adoptive parents also can “carry-forward” credits for adoptions dating back to 2005 for potential refunds on their 2010 tax returns. That’s good news for a lot of families. Another H&R Block client expects to receive a $65,000 refund because of the credit. The credit is supposed to help families, many of whom spend about $30,000 on attorney’s fees, placement agencies and travel expenses for a private adoption. The law allows parents who adopt “special needs” children to receive the maximum credit even if they didn’t have expenses.
Readers, do you plan to use the credit?