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Do You Adopt For Money? Or Do You Adopt For Love?

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Lukes Dad's picture
on Fri, 03/16/2012 - 15:18

Do You Adopt For Money? Or Do You Adopt For Love?



Think Our Children Are Not Being Sold!

And we wonder why our nation is going broke. Do you adopt for money?

Or do you adopt for love?

SMITHFIELD, N.C. (CNNMoney) -- The Wards couldn't believe the news

when their tax preparer called to tell them they're getting a $54,000

refund this year.

Thelma Ward was speechless. She had to hand the phone to her husband

so she could dance around the living room floor in shock.

"I was thanking God like never before," she said.

"We're just overwhelmed -- that amount was so huge it was


Even their tax preparer said she had to check the math -- 10 to 15 times.

"We couldn't believe it when we totaled everything up. We were like,

that can't be right," said Dee Carter, owner of the local H&R Block

where the Wards have brought their taxes for more than 10 years. "We

had never seen anything like it before, so we had to check it over and

over again."

So what's bringing this windfall? The federal adoption tax credit.

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



The credit has been around since 1997, but this tax season it is

refundable for the first time -- which is the tax equivalent of

hitting the jackpot.

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.


"When this was first coming through the tax reform legislation, we

just kept looking at it going, 'Wow, this is really, really

significant for people adopting,'" said Kathy Pickering, executive

director of The Tax Institute at H&R Block. "It's not a large

population who can claim it, but for those who do, it can really

change their lives."

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."

They tried to deduct what?!

"People adopting from the foster-care community are typically lower

and moderate income, and most don't have a significant tax liability,

so the credit never helped them," said Mary Boo, assistant director of

the North American Council on Adoptable Children. "The expenses they

have are life-long, so the government really stepped up this year to

help these people."

It's significant to the Wards, who only make about $39,000 per year.

"We didn't get into foster care to adopt anyone, but when we started

being foster parents we couldn't let a child leave us without a place

to call home," said Thelma.

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.

"Any little bit helps, but it still doesn't cover it," said Thelma,
who has had to learn to stay on a tight budget to afford giving her
children the care they need.

Kelli, only three years old, has a serious heart condition and has

required medical attention since she was born. She is scheduled for a

major heart surgery this month.

7 best apps for filing taxes

Octavius has a heart murmur and is in and out of the doctor's office

constantly. And all of them -- including Joquavius, Zoie and Mckayla

-- require either speech therapy, psychiatry or special classes for

learning disabilities.

This attention really adds up, both emotionally and financially. So to

save money, Thelma focuses on the little things, like using coupons

everywhere she can, selling her children's clothes at consignment

stores, buying everything used and holding yard sales.

While the kids are at school, Thelma goes to three grocery stores to

do her weekly shopping. But the family's weekly grocery bill still

totals around $400, including the more than three gallons of milk and

four loaves of bread the children go through. It usually takes five or

six trips to the car to get all the groceries unloaded.

The Wards hope to use their windfall refund to take their big family

on a vacation, pay bills, and buy new windows for their home -- which

needs a little repair after housing so many foster children over the

past years.


"We'll have to see what we can afford," said Thelma. "Money comes and

money goes, so we want to make sure we spend it all wisely."

Many more 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.

How I'll spend my refund

That's a 50% jump from the 2009 tax year -- but not because adoptions

have increased that much. Instead, many people who had no tax

liability in previous years, and thus wouldn't have been helped by the

credit, are now filing. And 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.

"We went in having no clue about the credit, and we even thought we

may have to pay money," said Tina Thomas. "We never, never would have

expected it."

But before you run out to adopt a child in order to cash in on this

credit, know that the IRS is a stickler for documentation and isn't

doling out refunds like this to just anyone.

"If you're claiming the credit because of the nature of the credit and

the size of the refund, there are many documentation requirements that

Congress included along with it," said Eric Smith, a spokesman for the

IRS. "It is a generous credit for those who qualify -- that's why

policymakers want to make sure the people who deserve it get it, and

those who don't, don't.