During last week’s Board of Director’s meeting, the subject of the 2010 adoption credit was brought up for discussion. As you may be aware, the 2010 adoption tax credit (ATC) was preserved for 2011 and increased to the amount of $13,360. Additionally, the tax credit is now available to families who have unused carry forward adoption deductions from previous years. This simply means that if you were unable to utilize your adoption tax deductions due to limited tax liability in previous years, then any unused amount can offset your 2010 tax liability; and if the carry forward amount exceeds your tax liability, then the excess will be refunded to you.
There are two IRS publications that your should review and discuss with a tax professional to make sure that you fully benefit from this expanded and refundable adoption tax credit. The first is IRS Tax Tip 2011.34 – Seven Facts about the Expanded Adoption Credit which is a summary of the adoption credit. (You may download it using the link above or can view it at - http://www.irs.gov/newsroom/article/0,,id=236174,00.html)
The second is Notice 2010-66 which provides interim guidance on the adoption credit. Section 3 - Interim Guidance provides an example of how the carry forward from a previous year can be used to reduce your 2010 tax liability with any excess refunded to you. Section 3 also makes reference to the fact that carry forward amount is not subject to the income limitation. (You may download Notice 2010-66 using the link above or can view it at – http://www.irs.gov/newsroom/article/0,,id=228301,00.html)
I trust that this good news arrives at a time when you could use a little encouragement, although the warm weather in McLean this past Friday alone, was a welcome respite.
Chief Financial Officer