Unused Adoption Tax Credit can boost your retirement savings

Here is something I learned recently that could be useful to a few of you: If you adopted in 2012 or later and you are middle class or lower then having lots of deductions for extra kids means much of your Adoption Tax Credit could expire without being used because you don't have enough tax liability. Here is something that some of you might be able to do to make good use of it: If you have a tax deferred Traditional or Simple IRA or a 401K from an old job then you might be able to roll it over into a Roth IRA. Normally you would need to think twice about doing this because the amount you move to the Roth IRA will be taxed. But if you have a big unused Adoption Tax Credit then that tax will be covered if you do it now. You'll still owe state income tax for the move but that is typically a lot less than federal. Once in a Roth IRA then there will be no more taxes on the balance or any future earnings. This could be worth a lot of money if you are far from retirement. If you leave your retirement savings in a tax deferred retirement account then you'll owe both federal and state taxes on both contributions and earnings when you start using the money during retirement. The difference could be worth many thousands depending on how much you move and how much your money grows. If you do this then you'll have a larger taxable income for the year. Be careful not to let it get too high all in one year. You probably don't want to get it above the $110K married limit ($75K single) for the additional child tax credit. Of course we all hope the Adoption Tax Credit will become refundable again before it expires.