Take a minute to picture in your mind two American families. Both with working parents, children in school, weekends filled with errands, chores, kids’ sports practices, grocery shopping and more.
Now imagine both families adopted a child last year. But when they go to file their taxes the similarities stop. Only one of these families will qualify for the federal adoption tax credit.
Why? Because these families have different household incomes, and all too often, low-income families don’t receive this post-adoption support. That’s because the credit is not refundable, meaning families can only receive the credit if they have a large enough tax liability. A 2020 Congressional Research Service Report shows that on average, taxpayers making less than $50,000 in adjusted gross income receive only a small fraction of the available adoption tax credit financial support. Many families in this situation receive none of the adoption tax credit at all.
We should be sending a message to all potential parents that they will be supported after they complete an adoption. But right now, only middle-income families get that message; families with a low household income are left to wonder how they can afford to support a child. In fact, according to the 2022 U.S. Adoption and Foster Care Attitudes Survey from the Dave Thomas Foundation for Adoption, “those considering foster care adoption say having financial support for the child’s emotional and physical needs, as well as various emotional supports such as counseling services and support groups, would make a difference in their decision to pursue foster care adoption.”
After my family completed an adoption a few years ago, we were fortunate to receive the federal adoption tax credit after we filed with the IRS the following year. Like many other adoptive families, we had a lot of expenses during our adoption process: adoption agency fees, completing a home study, obtaining certified documentation, travel expenses and more. After our adoption, the expenses continued as we met with medical providers and specialists offering post-adoption support. My family qualified for the tax credit because our income level led to a large enough tax liability. In other words, we received financial support because we made enough money. If we made less money that year, we’d have had less financial support.
Shouldn’t it be the other way around? Those who make less should be the first ones we ensure are supported.
A solution exists to fix this problem. Congress can pass the bipartisan bill the Adoption Tax Credit Refundability Act. This bill will allow lower-income adoptive families to have the same level of support middle-income families receive. With over 117,000 kids in the U.S. foster care system waiting on adoption, we should ensure there is not a financial barrier that keeps a child from the love of a permanent family.
