Taxpayers that have adopted a child or children are entitled to a tax credit (the Adoption Tax Credit). The maximum tax credit for the 2010 tax year is $13,170.00 a child, which is higher than the cap of $12,150.00 in 2009. Besides the increase in the cap, the tax credit for 2010 is also refundable and therefore, a taxpayer will receive a tax refund check for the credit. In previous years, the credit was not refundable and taxpayers could only use the credit against future tax liabilities. This refundable tax credit has come as a pleasant relief for individuals and couples who have adopted children, as they can now receive cash for supporting them. The Adoption Tax Credit was provided help taxpayers cushion against the significant fees that go with adopting a child. On average, a private adoption can cost an individual of about $30,000.00. The tax credit is therefore, given to ease the steep costs incurred when adopting. Furthermore, individuals and couples who adopt special needs children can claim the maximum amount of credit without providing proof of expenditure.
In spite of the guarantee of the receipt of a refund check for the credit, most of those that have applied for the credit refund have yet to receive their checks. The delay in the distribution of refund checks for the adopted children credit has lead to untold frustrations and inconveniences, as households and individuals had already planned their finances in anticipation of the funds. Some parents who have adopted 5 children and above are expecting refund checks of over $60,000.00 from the Adoption Tax Credit, and many of these taxpayers have financial commitments that heavily rely on the checks.
An example is a case of a couple that is expecting a refund of $65,000.00 and are looking to use the refund check towards a down payment for a foreclosed house. The couple laments that they could be losing out on a good deal to purchase a big house and provide better accommodations for their adopted kids if the check does not arrive in good time. This is just one of many cases of taxpayers who have been inconvenienced by the delays on the credits. Furthermore, taxpayers who had claimed other refundable credits received the refunds only for the other credits, but not the Adoption Tax Credit, which is where the bulk of their refunds may come from click site.
What is the reason behind the hold up? The IRS is taking their time with these refunds, owing to the high value in refunds that is characteristic of the adoption credit. The IRS is applying extra caution before releasing these costly checks. A report from the Treasury Inspector for Tax Administration showed that in the 2010 tax year, 72,656 taxpayers had tax returns with a claim for the Adoption Tax Credit, which totaled to the staggering amount of $897 million. The IRS has isolated about 58% of these tax returns for further scrutiny (these taxpayers have yet to receive their refunds). The IRS is also checking to confirm that the expenses being claimed are genuine and properly submitted. The IRS has blamed the delay on extensive erroneous applications of the credit and the lack of support documentation from many claimers. However, the IRS has acknowledged and apologized for the delay but unfortunately, it has not provided a timeline for completion of the review processes. Therefore, the sufferers of the delay are left with no other option but to wait and keep checking their mailboxes in hopeful (or excruciating) anticipation. However, they can also choose to voice their frustrations and share their grievances on a website, “Adoption.com,” that has a forum that enables them to vent out their opinions on the situation.