Just had my taxes done and I'm really sad.....

I may be a little late getting into this game, but any adoption credit not used can be carried forward for 5 years in total.

Yes, I misunderstood. However, we did not have a zero tax. We DID have this after deductions from our farm, etc. And....my hubby has the maximum amount of taxes taken out of his check to begin with. And yes, I understand that the credit can be used for the next five years. I'm not begrudging anyone who receives the tax credit depending on what they made or honestly claim. I explained in another post that I was irritated at myself for misunderstanding it and the post was emotionally written. Hence, I have learned from the way this thread has gotten off track many times, NOT to post when one is feeling badly or seriously needing support. Sad, but true. This also explains why some people have left these forums for sites to find the support that they needed. Thanks for replying.... Sincerely, Linny

Cheer up! If you don't owe enough tax to get the full adoption tax credit, then you can at least convert your IRA to a Roth IRA for free. (Of course, this assumes that you have, or are willing to open, an IRA.) Suppose your IRA is worth $20000. Normally, when you convert to a Roth IRA, you have to pay tax in the year you do the conversion. If you're in the 15% tax bracket, that would mean you would owe $20000 x 15% = $3000 in tax. But if you have a $10000 tax credit coming and no tax owed, the $3000 is just subtracted from the $10000, meaning you pay no tax at all, and you still have a $7000 tax credit coming. Probably you'll owe *some* tax in the next five years, and that will eat up some of your $7000. If your income is that low, you can contribute to an IRA over the next few years and take a tax deduction for the amount you contribute. Then you can convert the IRA to a Roth IRA, eating up more of your remaining adoption tax credit, but still owing no tax. If you don't have an IRA, maybe you have a 401(k) from a previous (not current!) employer. You can convert the 401(k) to an IRA, then convert the IRA to a Roth IRA, using up more of your adoption tax credit. The benefit to all of this is that you will then have a Roth IRA, which will be totally tax free in retirement. Because it is tax free, you don't have to contribute as much to fund your retirement as you would with a "traditional" IRA or a 401(k). So you don't get all the money back from the government now, but the amount you won't owe in the future will more than make up for it! -Ed

Linny, If you paid ANY federal taxes in a given year you may claim up to $10,000 PER CHILD adopted as a credit on the taxes you have paid. It does not matter if you owe nothing at the end of the year or are getting a refund anyway due to W2 withholding. It is what your tax liability for the year was that counts. So if I understand your post correctly, you should get a CPA to review and file an amended return. Basically, if you paid any federal taxes during the year as payroll deductions these will be paid back or credited to you up to the $10,000 per child adopted. If you didn't give the federal government ANY tax during the year because you didn't have any income you of course would then have a zero amount of credit/refund anyway.

I was also disappointed with my taxes this year... I do not make a ton of money but enough to provide for my adopted child and I... I adopted because I love children and wanted to have some of my own... I was also very confused about the credit thing when I adopted my dear daughter.. I thought you would get some of it back when you filed taxes the following year... I did not get anything back because I did not have enough taxable income and yes I am single.. so I know how hard it hits families like mine... I know that I paid a lot for my dd but I also know that she was well worth it...I do have to say though that the credit helps those who already have money and who are more able to spend the money that places charge to adopt... I was able to carry over 5000 to the next tax year but it doesn't look like I will be able to use it then either... I think maybe Bush had his heart in the right place but he needs to look closer at the needs of the people who do adopt... If you have anything to say please make it be nice because I don't want to be lashed out at because of what I think....

If you got no tax credit benefit you must have paid zero in Federal Taxes. Is that correct? If so, that would make sense I guess. If you paid ANY taxes to Uncle Sam for the year you would get up to the credit in a refund. Please clarify.

Ok, I must be very confused:) We are a single income family. We finalized in 2001. My husband claims zero. We got over $6,000 back this year!!!! We will still be able to claim the adoption next year also. We are banking this money to pay for another adoption. I don't understand how we benefit so much from the credit and others don't. On our other adoptions we also made out very well. We do own a home, but we have nothing else to claim besides the kids and the adoption. I am so sorry to hear about your disppointment.

Well this info is good to know because agencies need to stop telling adoptive couples that they can get most of their money back through the tax credit. We as adoptive need to educate these agencies that this is not correct and they need to refer couples to speak with certified CPA's regarding this tax credit issue instead of giving their opinions. I can't tell you the number of agencies that have said you can get most of your money back through the tax credit.

I totally agree with you ellia3....I get so mad now when I see the adoption websites promoting"you'll get your money back through the adoption adoption tax credit".Even with our adoption,our adoption lawyer told us from day one,we would get our money back.WRONG! Were only geting $50 back.We were going to use this for our next adoption but now have to come up with other ways to finance our next adoption!!!

Okay. My husband is the only person who works out of the home. He has the maximum amount of taxes taken out of his paycheck. We also do a very, very small farm. We deduct some of our farm expenses. When this was all figured in, we got back a little less than we did last year. I'm not complaining that we got NOTHING back, it's just that we got NO MORE back because of the tax credit than if we had not claimed it. The tax credit, as it was explained to me, is only used to REDUCE the amount of tax you MAY OWE. So, we owed no more than we already had taken out. Did my husband get that money back----yes.......but we ususally do. Once the 'owed' amount is down to 'zero' due to deductions, the amount cannot be lowered; thus, we got 'no extra' back. And yes, we can forward this amount to next year....and for a total of five years. The problem for me, was, that I misunderstood. I thought that if, after all deductions, we were getting back, say, $2,000. I thought that the tax credit was added to this.....and when we spent 'XX" on adoption, some or all of that amount would be refunded. It wasn't and it isn't. As I said, my mistake. And yes, I'd like to get upset at the agencies and attorneys who use this 'ploy' as an excuse to jack up their prices. I just talked with an attorney a couple of weeks ago (who has NOT increased her prices)....but told me of another attorney who HAS increased his prices 'because of the tax credit'. Sad, but true. Sincerely, Linny

Linny, This absolutely cannot be true!! If you paid ANY taxes this year, then you are getting more back than you would have had you not claimed the adoption credit. I still don't think you understand. First of all, your husband having the most he can taken out of his check has absolutely nothing to do with this. You've mentioned this at least three times now, yet it has no bearing whatsoever on the amount of taxes that you actually should have paid last year (i.e. your tax bill). Please take this out of your thinking because I think it is just confusing you. Your "reduce the tax you may owe" statement in your post is correct, IF, AND ONLY IF, you consider the "tax you may owe" as your tax bill (i.e. the amount of taxes you "should" have paid last year). This credit DOES reduce your total tax bill by either the total of your tax bill or $10,000, whichever is lower. Whether you got a refund, or always get a refund, or still owed taxes at tax time, or always owe taxes at tax time, or whatever, is irrelevant. The credit should be used to move your tax bill to "zero". If you are saying that after your deductions, etc., that your tax bill was zero, then, you are correct that you cannot reduce it any more, and you cannot get any of the credit back. But what that ALSO means is.......you didn't pay ANY taxes this year!!! You can't get a tax credit, if you didn't pay any taxes!! It's got to be one or the other. Either you reduced your tax bill to zero with the adoption tax credit, (which means that you DID get more back than you would have if you hadn't claimed the credit) OR you didn't pay ANY taxes this year. There are no other options!! In past posts, you have claimed that you DID pay taxes, yet you didn't get any benefit from the tax credit. That simply cannot be true. Lordy, lordy, I sure hope your accountant knows what he's doing!! It's either that, or he hasn't explained things very well to you. I certainly wish you the best, and I hope that you are getting all the government intended for you to!!

Destiny, First off, Bush and/or his people really didn't have anything to do with this whole concept for the tax credit. I'm not exactly sure when the original law passed, but I assume it was during the Clinton administration. What Congress did during the Bush administration was bump the credit from $5,000 to $10,000. (Don't get me wrong, I am NOT a Clinton fan at all, but I believe this whole thing started under his watch.) Anyway, the whole idea of a tax credit is a fairly easy way to give people help without having to come up with a lot of extra money out of the budget to do so. First off, a tax credit is MUCH better for you, the taxpayer, than a tax-deduction because it is dollar-for-dollar, whereas a tax-deduction is only good for a percentage of the deduction (the percentage is equal to your tax bracket percentage). So, tax credits are a much better deal. As far as the Federal budget goes, it is much easier to justify giving a tax credit to people than it is to just hand out $10,000 to anybody who adopts, mainly because it is MUCH cheaper and you don't have to worry near as much about coming up with "extra" money in the budget to give to these "adopters". Because you are only giving money to taxpayers, and only up to the amount that the taxpayer paid, the government, in essence, is only giving back the money that the taxpayer gave them in the first place. The government has eliminated having to justify digging into their own budgets and handing out a bunch of money to people that don't pay taxes. By simply "allowing" these taxpayers to "keep" the money that they normally would have given to the government allows them keep their budget where it is. (It just reduces the federal governement's income.) Remember, tax credits were designed to give back some of the hard-earned money to the taxpayers that the government "took away" from them in the first place. If your income was low enough that your tax bill was "zero", then you didn't pay taxes and the government didn't take any of your hard-earned money away from you. For those with higher incomes, the gov't. is trying to give them some of that money back that they normally take from them. They really aren't helping the higher income people "more". It's just harder for them to justify giving money to someone that didn't give any money to them first!

I think the point is Linny is upset that she misunderstood the tax credit. I am sensing she needed to vent and also she wanted to let others know they shouldn't assume they will qualify for the tax credit. This part is not directed at anyone in particular. The reality is if you don't owe taxes the tax credit does not benefit you in any way. Personally, I think it is very generous of our government to even offer the tax credit. Can't we quit bashing the system and be happy that the credit helps people. You don't have to be rich to benefit from the tax credit. We live off from one income, live in a 50 year old home and drive used cars. Yes, we live comfortably, but that does not mean we have $25,000 sitting in a bank or any other asset for that matter that can be used towards adoption. I guess, I am just sensing some people think that if you can take the tax credit you must be rich. Remember that if you make over $150,000 ( I am not positive on this number) your credit is reduced. I understand that people are upset that they can't take the credit, but don't bash those who can in the process of venting. I have not had anyone tell me I am guaranteed $10,000. I have been told it is available and to talk to your tax advisor to see if you qualify. I feel for those of you who were told you should count on it. The moral of the story is look at your own situation before counting on the tax credit. These are just my personal thoughts on the matter.

Yes, Jedatu, you are correct in your assumptions. It was this 'shock' and saddness that 'set me off'. In addition, I am tired of reading and hearing agencies, attorneys and facilitators justify the increase in their fees because of the tax credit. You have given the best advice: DON'T count on that tax credit------UNTIL you are certain of your own situation and have checked it out thoroughly. Believe me, I now have a 'bookmark' for the IRS website (which is surprisingly easy to navigate) to check on many things!!!!! Thank you. Sincerely, Linny

I just wanted to say thank you for those that responded... I didn't need anyone to explain it to me but I do know how frustrating the tax credit had been for me... I just wanted to share that with those that were also feeling the same frustrations.. I do, however, think that we have all been touched by adoption in some way and that we all need to listen to what other people are saying... I don't think that anyone that has responded to the first message has really taken a look at what was written and realized that this is someones opinion... Please don't try to make others angry because we all know that adoption is a wonderful thing and we need to share that with everyone!!!