As House Republicans mark up their tax overhaul, the Tax Cuts and Jobs Act, adoptive families are pushing back on their decision to do away with a critical tax credit.
The $1.5 trillion tax bill eliminates a slate of credits and deductions, including the exclusion for adoption assistance programs at work.
Under current tax law, families can claim a credit of up to $13,570 per child to cover qualified adoption expenses, including court costs and attorney fees, traveling expenses and adoption fees. Your credit is limited to your tax liability for that year, and you can carry it forward for up to five years.
Credits like this one reduce your taxes on a dollar-for-dollar basis. They're more valuable than deductions, which lower your taxable income based on your tax bracket.
This benefit begins to phase out for taxpayers with a modified adjusted gross income of $203,540.
Meanwhile, workers who are receiving adoption benefits from their employers can exclude up to $13,570 of assistance per child.
Some 63,960 taxpayers filed Form 8839 to claim the adoption credit in 2015, according to the IRS.
It remains to be seen whether the provision remains — and whether the Senate will keep it in its version of the tax bill — but some adoptive families are speaking out on what the credit means to them.
"We need $30,000 TODAY"
Brandon Jones, a developer at Google and adoptive father of two boys, shared in a series of tweets on Nov. 2 just how imporant the credit is to adoptive families.
It cost the Jones family about $50,000 to adopt their first son, largely due to adoption agency and legal fees, as well as medical, travel and other expenses, he tweeted.
Such figures aren't unheard of. Adoptions from a private agency can range from $20,000 to $45,000, according to the Child Welfare Information Gateway.
International adoptions are even more complex, with average costs as high as $50,000, plus additional expenses for passport and visa fees, translation costs, and more.
Credits versus costs
Even though adoptive families need to spend the money before they can claim the credit, the cash they get back helps make them whole.
This is particularly important for families that tap their assets, including their 401(k), or take out a second mortgage or home equity loan to cover those expenses.
Availability of the credit is a determining factor in whether people will adopt, Jones tweets.
