Julie and Brett Redden are in a hurry for the paperwork to go through for the six-year-old girl they are planning to adopt from China.It’s not just that they are impatient to start their lives with her as she joins an 11-year-old sister adopted from China two months ago. The Reddens are also playing a game of “beat the clock” so they can take advantage of a generous federal adoption tax credit.
They have already missed out on the refundable 2011 credit, which allowed tax savings of as much as $13,360 per child. In 2012, the credit is $12,650 and not refundable—meaning if their total tax bill is less than the amount of the credit, they will not get additional money back from the Internal Revenue Service.
But the Reddens’ real worry is that the adoption will not be completed by year’s end. And unless Congress acts, that credit will expire on Dec. 31, 2012.
“We are not rich. We are very middle-income, and we have scraped and saved and done everything humanly possible to bring these girls home,” said Julie Redden, a 31-year-old teacher in Houston.
Redden said she expects adoption costs for both girls to top $50,000, and there will be ongoing medical expenses because both have special needs—the older child is legally blind, while the younger one has cerebral palsy.
“The tax credit will be enormously helpful to pay for medical bills,” Julie says.
Read more at Accounting Today
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