Tax credit for adoptive families will lower at end of year

LAYTON — Time is running out for families who adopt children to receive tax credits.

For 2010 to 2011 tax filings, families across the country can claim a $13,360 refundable tax credit for adopting a child, under the new Affordable Health Care law. This is money that would come in the form of a check to augment a family's income to care for adopted kids. For 2012 taxes, the credit drops to $12,650. By Dec. 31, families will only be eligible to claim $6,000 to help cover adoption expenses.

The cut has many Utahns concerned, especially those who have benefitted from adoption and been aided by the tax credits in the past. Among them is Happie Larson. She has a soft spot in her heart for kids in foster care because as a teenager, she too was in foster care.

"This is not about building roads, this is not about a city park," Larson said. "This is about a child finding a home; that's being threatened and that's just not OK."

Larson and her husband Rich have adopted 15 kids, many of whom have special needs. In total, the couple has 19 children who range in age from 3 to 39.

"There are hundreds of children in foster care that don't have families," said Larson. "Those children are going to continue to remain in foster care if a family does not feel they can financially support the child."

As far as taxes go for families adopting kids, Larson said foster care kids are considered "special needs."

"These are people that are not looking for typical 'healthy,' 'normal' children," Larson said. "These are people that are willing to take children that are abused, neglected, and are deliquent. That is important."

Therefore, the change in tax credits for adopted families, especially those in foster care, would affect many middle-income families who could really use the tax break to buy necessities for the kids.

"That's going to buy you the bed. It's going to buy you the clothing. It's going to set the child up," Larson said. "It's going to open up your heart and your home because you know you can afford to have this child in your home."

And Larson feels many of these foster kids should remain with their siblings, which the drop in tax credits affects.

"Many of the children available for adoption are sibling groups, so you're taking on two, sometimes three children into your home," Larson said. "And the adoption tax credit is just a small incentive to offset some of those expenses."

Since 2011 taxes credits drop to just over $12,000 dollars in non-refundable taxes, that means the credit goes towards any tax liability a family owes. Larson said it helps, but it wouldn't benefit people like her.

"I have no tax liability because of the amount of children that I have, so I would never have a situation where I would have to have a tax to be off-set," Larson said.

While there is bi-partisan support across the country to re-instate the plan, Utah lawmakers haven't signed on to co-sponsor the bills. Instead Utah is working to promote kinship adoptions, which would place foster kids with close relatives. Larson says will hurt kids in foster care.

"What happens when a child doesn't have a grandparent or an aunt or an uncle or can't move out-of-state with a distant family member? That child is here in Utah, and we're limiting that child so it can't be adopted," Larson said.

Larson said many families were adopting foster kids before the Affordable Health Care Act adoption tax credits, so they're not in it for the money.

"Adopting a child and giving them a permanent home now keeps them out of prison. It keeps them from becoming homeless. It keeps them from becoming drug addicted," Larson said. "So the money we spend now to get children into a permanent home saves us in the long run."

The House (HB 184) and Senate (SB 82) bills have been in committee since January 2011 and some Utahns like Larson are not confident any progress will be made to handle the adoption tax credit before Congress resumes.

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