Expiring Provisions: Adoption Tax Benefits
Published:
By Felicia Rupp, Senior, Tax Services Group | Jim Wagoner, CPA, Partner, Tax Services Group
There are several tax provisions (the Bush Tax Cuts) scheduled to expire at the end of 2012. We have summarized the change regarding the Adoption Tax Benefits below. Please look for future tax update articles that will include more information on the other expiring tax provisions.
Bush Tax Cuts in Effect (2011-2012)
– Eligible taxpayers can claim two adoption tax benefits, although the combined level of qualified expenses was limited to $13,360 in 2011 and $12,650 in 2012.
– In 2011, taxpayers could either exclude from their income up to $13,360 ($12,650 in 2012) of employer provided adoption assistance or claim a tax credit of up to $13,360 ($12,650 in 2012) or a combination of the two not to exceed $13,360 ($12,650 in 2012).
– In either case, the tax credit and exclusion are phased out or reduced for taxpayers at income levels from $185,210 – $225,210 in 2011 and $189,710 – $229,710 in 2012
Bush Tax Cuts Expired (Post 2012)
– The exclusion for employer provided adoption assistance will expire.
– The adoption tax credit will be available only for special needs adoptions.
– The limit for the credit will be reduced to $6,000.
– The income phase-out range for the credit will be $75,000 – $115,000