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Adoption Tax Credit Concerns

Thu, Aug. 01, 2013 Posted: 11:12 AM

You may recall the media coverage and concern regarding the potential discontinuation of the adoption tax credit at the end of 2012. Fortunately, the adoption tax credit was extended. However, a recent report by the National Taxpayer Advocate indicates that headaches for adoptive families still exist.

According to the report, the vast majority of families (90 percent) filing returns were subject to additional review to determine if an examination was necessary, while nearly 70 percent of all adoption tax credit claims during the 2012 filing season were selected for audit. The good news, I guess, is that more than 55 percent of those audited ended with no change in tax owed or refund due. The report is far too detailed to get into at great length here, so I recommend that those interested in this matter read the report in its entirety for a closer look at the issues and shortcomings.

It’s obvious that the adoption tax credit is a curveball the IRS is having trouble with. However, with more than 400,000 children in foster care in the United States and over 100,000 available for adoption – not to mention the millions of children around the world awaiting the love of a forever family – the adoption tax credit is critical to making adoption an affordable option for those couples looking to provide a home for a child in need. Therefore, it is of utmost importance that the IRS address the concerns raised in the National Taxpayer Advocate’s report.

As anyone who has been through the adoption process can attest, adopting a child is an emotional (and certainly rewarding) experience. At Bethany Christian Services, we are committed to making the process smooth and trouble-free for adoptive couples, and, more importantly, adopted children. Adoptive couples, like biological parents, will face a number of challenges in raising their child. One of those challenges should not be worrying about being audited by the IRS when filing for their adoption tax credit.

For many Americans, the adoption tax credit has made adopting a child possible. I am grateful that Congress approved the continuation of the credit and hope that couples are able to take advantage of it. While many may experiencing a bump in the road with their refund, I would counsel those couples to have patience, because in the long run, the years you enjoy raising your child will greatly outweigh any headaches resulting from issues with the tax credit.

For more information on adoption, please visit to find the Bethany office nearest you.

Bethany Christian Services