[pondd]

Possible Duh..Question? When the tax credit is given, does that mean you get the actual $10,300 refunded to you? I have heard mixed things and I am not quite sure what to expect. I am hoping that we get the full amount back so I can pay back the adoption loan that I got. Thanks for your help..

Debbie P

[KayV]

You get back what you owe in taxes for the year. So, if it's determined that you owe $5,000 in taxes, and you paid in $5,000, you'll get $5,000 back. This will be stretched out over 5 years until the $10,000+ credit is reached. You will only get the full amount back as a refund if you owed that much taxes in the year you're claiming the adoption.

KayV

[pondd]

How does that help if you usually don't owe taxes when you file. We usually get a refund... I am not a math genius and always have HRB do our taxes and I have called them and they can't give me a clear awnser yet. They are checking into it.... Thanks for your patients in helping me thoroughly understand this before I do my taxes in Feb.

Debbie P

[Imani68]

Since it's a credit, if you don't owe any taxes, you won't get the credit. Definitely a negative if you always get a refund.

[cheri25]

It's not exactly true that you won't get the credit if you usually get a refund. We always get a refund just because we only claim 1 deduction and we overpay our taxes (yes I know free money for Uncle Sam, but it works for us- )

For our first adoption we got the credit, but it took us 3 years to get the whole amount back. The first and second year we got back, as a refund, everything we had paid in federal taxes for the year, plus the child tax credit. Then the third year, we used the last $1100 or so that was left of the adoption credit, and that combined with the child tax credit, we got a refund of all but $2000 of the federal taxes we paid for the year.

We used tax software too, and it figured it out for us. I know every situation is different, but I know for us we never owed taxes at the end of the year, but we were still able to claim the credit. Now, I don't think you can claim the credit if you didn't pay any federal taxes though.

Clear as mud?????

[leaabc123]

When you get a refund, you are geting back whatever you overpaid into the tax system.

So, say you paid in 10,000 but only owed 5,000. You get 5,000 back as a refund but there is still 5,000 that you paid in.

If you qualify for the adoption tax credit, you now have a credit of 10,000 (or whatever it is). So, that first year, you also get back the 5,000 that you put in and the rest of the credit carries over to next year.

[becky]

It is rare that someone doesn't 'owe' taxes. You almost always owe...but you have paid most of that bill during the year by having taxes withheld from your paycheck. Sometimes you even overpay your bil and you get money back (refund).

What you need to do is check line 42 of your previous tax returns and see how much 'tax' you actually owe each year. If that amount is $10,000 or more you will get to claim the full credit. If you paid in at least $10,000 in withholding through the year, you will get $10,000 back when you file your return.

[egrace]

Also you can look at your last pay stub or when you get your W-2 statement, look at line 2 "Federal Income tax withheld". This is the amount you payed the federal govt this year.

For example, the amount is 4000. Once you do your taxes you get your normal refund say 500. That means your total federal taxes you paid for the year is 3500. Then you add your tax credit of 10300. You would also get the $3500 back as well and have a remaining tax credit $10300-$3500 of $6800. So the next year, you have a remaining credit of 6800, and over the next 4 years you can keep applying your adoption tax credit till the balance is zero.

There are also income limits as well. If your AGI is over 150,000, then the credit amount is reduced.

We used turbo tax for ours. Hope that helps. I would think HRB has similar software. If they don't understand i would hire someone else.

egrace

[britfish]

does anyone know the exact amount of the tax credit? And thanks for all the great explanations of how it works. I think I finally understand it.

[mindy41065]

So my questions is. Do you actually get money in your pocket for the tax credit? Or is it just a contiuning credit each year to you until the $10,300 runs out.

[becky]

I know it is something like $10,900...but I don't have the exact figure...it goes up by a few hundred each year.

[brinawynne]

I think the amount changes from year to year...this year it's 10630.00

[hoping123]

I work for H&R Block during tax season and before we started getting really busy, I played around with my possible tax return for 2006 as if everything were the same as this year, but, as if we had a referral and it would be finalized at the end of this year. We will be getting back about $4,000 from federal this year, but, if we had adopted and it was final, we would be getting a refund of close to $11,000-- the $4000 + approximately $7,000 towards the credit. The rest of the adoption credit would carryover for the tax return of 2007 of which if our pay stayed the same and nothing really changed, our return would be the $4,000 with approimately $3,900 left over from the credit for a total refund of approximately $8,000. I hope this helps.

[pondd]

Thank you guys for helping me understand a little better as what will happen.