Health care reform includes tax credit for adoption

adoption
adoption

There are 130,000 children in the foster care system waiting to be adopted in the US. Their prospects may have just gotten a little brighter. The recent health care reform bill has extended the previously boosted adoption credit which was slated to "sunset" at the end of 2010. Without the extension, the credit would have reverted back to the 2001 limits of $5,000.

Generally, you can take a tax credit on your federal income tax return for qualifying expenses paid to adopt an eligible child. Tax credits are desirable because they are a dollar for dollar reduction in your tax liability.

An eligible child must be under age 18 or physically or mentally incapable of caring for himself or herself. Qualifying expenses related to an adoption include reasonable and necessary adoption fees, court costs, attorney fees and travel expenses. You may also be able to include other expenses directly related to the adoption.

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