Imagine making $39,000 (couple) and your tax guy calls to tell you you’re getting a $54,000 refund? I know you and uncle sam would hit the floor! LOL!
It happened to a couple in North Carolina. The Wards couldn’t believe the news when their tax preparer called to tell them they’re getting a $54,000 refund this year.
So WTF! How did this get all of this money back? The federal adoption tax credit. Now don’t you roll out there to adopt kids just for the money, you should do it from the heart! I digressed!
In the past few years, the Wards have expanded their already big clan of seven children by adopting five new kids. For each of these adopted children, they are eligible for a one-time tax credit of up to $13,170.
The credit has been around since 1997, but this tax season it is refundable for the first time.
A refundable tax credit lets you get the cash even if you owe no taxes. A non-refundable credit just offsets any taxes you owe, and then rolls anything remaining to the next tax year.
The Wards adopted the five children over a span of three years, so they’ve filed for the tax credit each year. But because they didn’t make enough money, the tax credit simply rolled over from year to year and accumulated.
This year, because the credit became refundable, they are getting all the previous years’ leftovers in a lump sum. (The couple had an earlier adoption, in 2004, but unused credits can only be carried for up to five years.)
While the Wards haven’t received the refund check yet, H&R Block calculated that the unused adoption credits from the past five years add up to $45,560 — making up the majority of the $54,000 refund they’re expecting.
A typical private adoption runs about $30,000, so the credit was intended to help families by reimbursing expenses, such as court fees. But the tax law allows parents who adopt “special needs” children to receive the entire credit even if they had no expenses.
All of the Wards’ foster children qualified as special needs, so Thelma was able to claim the full credit even though there were no adoption expenses. This is not unusual for foster children; about 80% of these kids are considered to have “special needs.”
She had to quit her job at a daycare to take care of her new children. And her husband, David, who works at a concrete company, had to take a significant pay cut last year to keep his job. The one saving grace: As foster parents, they receive about $3,300 a month from the state of North Carolina until the children turn 18.
Other families are also finding themselves in the enviable place of planning what to do with such a windfall. Tax preparer H&R Block said 8,000 of its own clients have already claimed the credit, and the company expects 150,000 total taxpayers to claim it this year.
Some of the refunds it has seen range as high as $90,000.
A couple from Alabama, Tina and Kenny Thomas, recently adopted five kids from foster care and are now expecting a check for a whopping $65,000, thanks to this credit. Like the Wards, they had absolutely no idea it existed until they went to their tax preparer.
Via:BlackMediaScoop.com
