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Hi! I am completely ignorant of how taxes and especially how the tax credit works for adoption. We are just staring an international adoption and I could use some info.
We already have 4 biological children, hubby makes around $70k per year, we ALWAYS get a refund of about $4k due to the child tax credit.
If we are looking at an adoption that costs $30K, (sibling group of 3) will we get that back in a refund check or how does it work?
Thank you ahead of time for explaining this REALLY SIMPLY! LOL!
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Don't feel stupid. I have a SIL who is a tax professional and I just hand her the whole pile of stuff and say 'go too.' And then pay her in red swedish fish! ;)
Here is an edited quote from another of DianeS's posts.
If you pull out a copy of your last year's tax return, there is a line that says Tax Liability. It's the line that is filled out from the tax tables. It'll be near the end, but the exact line number depends on the exact form you fill out.
Ok. Keep in mind that I am not a tax professional. Or even very knowledgable. But here goes . . .
It sounds like you are in the right spot, from looking at mine. There is a line that says 'Taxable Income' and then following that is 'Tax' which is the amount of taxes you owe based on that 'Taxable Income.' Then, you may or may not have some credits following that. Foreign tax credit, Education credit, Retirement savings contributions credit, Child tax credit, etc. Below that, on line 56 of my form from 2008, is that amount we actually paid in taxes. That is the amount that you still owed in taxes for that year when all your other things were taken into account that the adoption tax credit could be used to reduce or eliminate. Clear as mud?!
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Thanks so much. I found it. Unfortunately after the child tax credit ours is only $550. I'm guessing that that is the amount we would get back in adoption credits. Bummer. We really thought we could fund the adoption with the tax credit, but it's really deceiving how it's set up. I'm so discouraged.
I appreciate your help, though. Now we know before we got too far into the process that adoption is probably not possible for us after all. So sad.
It really is sad how much misinformation there is out there about the tax credit put forth by agencies. Way to many agencies present it as 'You are going to get a check for $12,000.' when the reality is that for many families it does not benefit them at all.
Keep in mind that changes to your income, changes to your deductions, etc. are going to change that bottom line. You can also carry over the amount for up to five years to use it all up. So do look at your situation over all and over time. If going forward with the adoption is something you feel strongly about, it might be worth a little time and money to make an appointment with a good tax consultant who is familiar with the adoption tax credit to see if they have any suggestions.
Good luck!!