The answer is No. However, the amount of the credit may be reduced significantly after December 31, 2010. Indeed, the federal adoption tax credit was implemented in 1996, and provides a credit of $5,000 to adopting parents for the adoption of a child ($6,000 in the case of a child with special needs). Fortunately, the law does not include a “sunset provision” whereby its provisions will expire and therefore, this version of the adoption tax credit is permanent.
However, in 2001, Congress ammended the original tax credit law increasing the amount of the adoption tax credit to $10,000 per child. Congress also insured that the credit would increase each year for inflation. Currently, the amount of the adoption tax credit is $12,150. Unfortunately, Congress included a general “sunset provision” for the Act, which states that all provisions of the Act do not apply to taxable years beginning after December 31, 2010. On January 6, 2009, Representative Wilson of South Carolina introduced House Bill No. 213 entitled: “Adoption Tax Relief Guarantee Act of 2009.” The purpose of the bill is to repeal the sunset provision of the 2001 bill.
In other words, this bill will remove the sunset provision and allow the more than $12,000 credit to continue in full force. The bill was referred to the House Committee on Ways and Means Committee and remains there as of now. If Representative Wilson’s bill is not passed and Congress does not repeal the “sunset provision” as it applies to the adoption tax credit, the amount of the adoption credit will revert to the $5,000 original limit ($6,000 for special needs children) for all taxable years after December 31, 2010. Fortunately, many believe that the bill will pass and the current version of the adoption tax credit (which increases each year to account for inflation) will be renewed.
Please note that we are adoption professionals and can discuss our program, but any specific information about the tax credit (like whether or not you qualify) should be directed to a tax attorney or accountant.