Hello, future parents! Are you considering expanding your family through adoption? Or perhaps you’ve already welcomed a new member into your family? If so, you might be eligible for an adoption tax credit. This credit can help offset some of the costs associated with adoption. But, like a complex puzzle, it’s crucial to understand how long this tax credit lasts and what requirements you need to meet to claim it.
What’s the Adoption Tax Credit Anyway?
Think of the adoption tax credit as a financial superhero, swooping in to provide financial assistance to families who have adopted or are in the process of adopting a child. This credit can help cover expenses related to adoption fees, court costs, attorney fees, travel expenses, and other eligible expenses associated with adoptions.
The Lifespan of the Adoption Tax Credit
As of 2021, the maximum amount of the federal adoption tax credit is $14,440 per child. So, if you’re adopting two children, whether simultaneously or over time, your total available credit will double accordingly.
But, like a game of Monopoly, there are rules to follow. According to IRS guidelines for claiming this tax credit:
- The total amount of qualified expenses eligible for the federal adoption tax credits must exceed $14k.
- The amount of initial qualifying charitable contributions should match up with each event year expense claims.
- Expired-for-purpose-equipment cannot be added into qualifying expense.
And there’s more:
- You must complete finalization procedures within three years after making claim application for them.
- You can claim this tax benefit only when file yearly taxes until all benefits are claimed.
So, it’s important to move quickly post-filing their finalization rather than delay any paperwork. There’s no guarantee they’ll be refunded even if they’ve been approved upon filing after expiry date.
To increase your chances during refund processes, make sure to avoid mistakes like improper funding due cash transactions only, selling family possessions, or improper notification of withholdings returned.
Wrapping Up
Adopting a child can be an incredibly rewarding experience, and the adoption tax credit is designed to help make the process more affordable for families. However, it’s important to understand how long this tax credit lasts and what requirements you need to meet in order to claim it.
By following IRS guidelines carefully and ensuring that requisite payments are made on time while avoiding any errors in procedures, you can ensure timely refund processes and get maximum benefits from claiming such credits.
So, go ahead and embrace the joy of parenthood, knowing that the adoption tax credit has got your back!