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Adoption ARC Newsletter
Fall 2012

Adoption ARC, Inc. is a private, non-profit child welfare agency that specializes in placing children of all races and special needs into permanent homes. The agency is licensed by the Pennsylvania Department of Public Welfare, the New Jersey Division of Human Services and the Delaware Department of Services for Children, Youth and Their Families to provide adoption, foster care and child welfare services to the tri-state area and beyond.

Adoption ARC was born in March 1994 in response to the 2,500 babies born in Philadelphia who need permanent homes. In addition, 7,000 children in the Pennsylvania social service system need homes. Adoption ARC was licensed in August 1994 by the Pennsylvania Department of Public Welfare to combat these problems by providing adoption, foster care and child welfare services in the state of Pennsylvania. In July 1997, in response to the need to service a larger area, we received an adoption license from the state of New Jersey Division of Human Services. In 2006, we received our license from the state of Delaware. Adoption ARC received its first full Hague Accreditation in 2008 and another full Hague Accreditation in 2013.

Permanent Tax Credit

The adoption expense tax credit has been around since 1997, but it was set to go out of existence at the end of 2012. Fortunately, a part of the fiscal cliff legislation, passed by Congress and signed by the President on January 2, 2013 made the adoption tax credit permanent. (American Taxpayer Relief Act of 2012 [Pub. L. No. 112-240])

All of the ground rules remain the same as they were for the year of 2012 except that the amount of the maximum credit will increase, as will the numbers that define the lower and upper limits of income eligibility. All three of these numbers are adjusted each year in accordance with the cost of living. The maximum credit for 2013 will be $12,970 (up from the 2012 number of $12,650) and the full credit will be available to taxpayers with a modified adjusted gross income (AGI) of $194,580 or less. The credit will then phase out completely at an AGI of $234,580.

All of the other features remain intact, including:

• the ability to carry the credit forward for up to five years in order to use it up,
• the ability to claim a flat credit (without the need to show actual expenses) for the adoption of a special needs child, and
• the ability to claim the credit in the case of a failed adoption attempt.

There is one limitation as the permanent tax credit is not refundable. It was refundable during 2010 and 2011 due to a provision of the health care legislation. Since this provision was not in the 2001 legislation (Economic Growth and Tax Relief Reconciliation Act) that was just made permanent, it is not a part of the current law.

Specific tax questions about how these changes may impact on your tax situation should be addressed to a qualified tax advisor.

Any Questions Please Call Us at 1.800.884.4004