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How can the adoption tax credit help me?

Just recently CCAI released our inaugural ‘CCAI In Focus’ report on the Adoption Tax Credit.  While everyone was hastily working to click “submit” on the IRS website before 11:59pm on April 15th, we thought it would be a great idea to share some positive tax news.  The federal adoption tax credit has been around for some time, but considering there have been some changes, most recently by President Obama’s health care legislation, we wanted to clarify a misconceptions and raise considerations that still remain.

This report was written primarily to serve federal policymakers, but has also proven useful to the adoption community in informing adoptive parents and advocates about this adoption incentive.  The report includes the following information:

  1. a brief overview of the adoption tax credit
  2. a detailed legislative history
  3. policy considerations
  4. a list of adoption tax credit legislation that is currently pending on Congress

Despite that this credit has been around for 14 years, affordability of adoption continues to be an issue for some families.  Adoption Fees can range from $0-$2,500 for foster care adoptions, up to $25,000 for private domestic adoptions, and upwards of $40,000 for intercountry adoptions.  The below chart details data from a small sample of adoptive parents CCAI surveyed:

Responses from parents who attempted and/or completed an adoption
Responses from parents who attempted and/or completed an adoption

What is most shocking is that while the Adoption Tax Credit was initially created to encourage foster care adoptions, only 25% of all public adoptions took advantage of this incentive, whereas nearly all foreign adoptions were support by this credit.  Another interesting point is that families whose intercountry adoptions fail are not able to receive this tax credit, whereas all domestic adoptions–even if the adoption never finalizes–are able to receive this credit.

There are two main policy considerations that are a result of the new provisions in President Obama’s health care legislation that was signed into law last month.  This law 1) extends the Adoption Tax Credit through December 31, 2011, 2) increases the credit by $1,000 to $13,170, and 3) for the first time makes the tax credit refundable so that families who do not have tax liabilities will be able to take advantage of this incentive.  Please refer to the report for more detailed information, and stay tuned for additional CCAI In Focus reports on hot topics related to adoption and foster care.

Returnable child?

13,231.  That is the number of Russian children who have found permanent, loving homes in America over the last five years.  One.  That is the number of adoptive parents who made the irresponsible, dare I say reprehensible, decision to return her adopted child to Russia.  800,000.  That is the estimated number of Russian children who currently call an orphanage their home.  As we talk about the circumstances leading up to the possible suspension of Russian-American adoptions, it is important to keep these numbers in their proper perspective.  No one can condone the actions taken by Torry Hansen.  Even if her allegations about her son’s mental condition are true, they do not justify her decision to forgo the plethora of options of assistance available for she and her son in the United States.  She could have reached out to her adoption agency, who could have directly provided her and her son the necessary support.  She could have reached out to the State of Tennessee Departments of Social Services or Mental Health.  And in a State that is well known for extensive faith based and community based networks there were undoubtedly people who if asked, would have stepped forward to help this family in need.  Sadly, she chose to take a different route and it is now in the hands of the Tennessee legal authorities to determine if her actions constitute a crime.

All that being said, two things we know for sure.  First, suspensions of adoption are not in the overall best interests of children.  Experience has shown that suspending adoptions do not lead to the legal and programmatic reforms which are used to justify them.  What they do result in is children spending additional, and unnecessary years, in institutional care.  Take Romania and Cambodia for examples.  It has been almost ten years since both countries suspended international adoption.  No significant legal reforms have been made and few, if any, efforts have been made to provide children living there with alternatives to institutionalization.  The legal and social status of children in both countries remain the same.  Both countries still experience high rates of child abandonment, child slavery and sexual exploitation.

The other thing we know for sure is that despite the appropriate use of best practices and protections, there will be cases such as these.  Not even the perfect system can protect against all wrongdoing.  What needs to exist is an international adoption system which provides for a high level of protection against corruption and abuse, and a federal and state statutes that allow for the prosecution of individuals who, despite these protections, abuse the adoption process or worse, an adopted child.  In ratifying the Hague Treaty on Intercountry Adoption, the US took an important first step in providing the U.S framework for such a system.  CCAI, along with Members of Congress, continue to push for improvements to the intercountry adoption system and for stronger and more explicit laws against corruption in international adoption.  We have and will continue to fully support the Russian Government in their efforts to continually protect the best interests of their children.  And finally, we remain committed to work with the U.S. State Department toward developing ways to quickly implement necessary protections.

In the meanwhile, as those who have experienced the many joys adoption brings, we have an obligation to speak out against the myths these types of cases can perpetuate.  Older children, even those who have spent years in foster care or institutions, are not by definition, damaged goods.  The bond between an adoptive parent and child is, in most every case, indistinguishable from the bond between a parent and their biological child.  And regardless of how the relationship between parent and child is formed, being a parent is one of the most challenging, yet rewarding, experiences a human being can have.

Be sure to check our website for resources as new information becomes available.

Celebrities Adopting

Yesterday, Jessica Alba appeared on ABC’s Extreme Makeover: Home Edition.  The family featured, the Beach family, had adopted 8 children in addition to 4 biological children!  Father Larry Beach said, “No matter if you’re in a travel trailer or a big house like this, we all have one calling; we’re all special to God.  That’s why we search out children who otherwise wouldn’t have a home. That’s what we hope comes out of all this.  There are a lot of children out there. Maybe they’re not perfect in the world’s eyes, but they deserve a home as much as any child.”  So inspired by the Beaches, Alba went on to say that she plans to adopt herself.  Alba is currently a mom to her 2-yr-old daughter Honor Marie with husband Cash Warren.

Alba on Extreme Makeover: Home Edition

I wanted to highlight a couple other celebrities who have chosen adoption.  When these individuals speak out and share their adoption experience, families and individuals across the country are made aware the need for adoption and are shown that all it takes is for someone to step forward and want to make a difference in the life of a child.

Recently, Katherine Heigl and husband singer Josh Kelley adopted a daughter with special needs, Naleigh, from Korea.  Heigl has always known she wanted to adopt, and even approached the subject with her husband before they were engaged.  Heigl’s sister, Meg, is Korean, so the choice of where to adopt from seemed obvious.

Heigl with her husband and daughter

Just over a month ago, actor Willie Garson’s adoption of a 8-yr-old boy from foster care was finalized.  “From the first time I met him, I said, ‘That’s my kid.”  Garson met his son, Nathen, at an adoption fair in Los Angeles.

Garson with son, Nathen

While Nathen’s story has a happy ending, Garson commented on the older teens in foster care who were at that same adoption fair.  Their stories more often have a sad ending of aging out of foster care without ever being adopted.  Across the country, this is true for almost 30,000 youth each year.  Together, we can raise awareness about these youth, and dispel the negative myths about youth in foster care.  These celebrities are helping to show Americans that we can step up and make a difference.

All you need is love?

This Saturday, the state of California will begin limiting the number of children each foster family can have to 6 children total–whether they are foster, biological, and/or adopted children.  Officials hope this new limit will improve the quality of service children receive while in foster care.

Just yesterday we posted a news article detailing this change on our Facebook wall.  Already, there has been an outpouring of comments related to this significant change.  The comments received have been mixed–several who spent time in care themselves advocate this is a much-needed change, while others with personal experience provide opposing opinions.

The fact of the matter is that limiting the number of children in foster homes is not a new concept.  The National Resource Center for Family-Centered Practice and Permanency Planning looked into this issue and published a list by state of limitations on the number of children in foster homes.  Their most recent report shows that the majority of states also have a limit of 6 children total in homes.  While some state have limits as low as 4 or as high as 8 children, there are other requirements based on factors such as special needs or mental health diagnoses.

Recently, Florida was in the news after a 17-month old child died in a foster home due to overcrowding.  This led to the creation of a task-force to investigate foster homes with more than 5 children.

On the other side of the coin, we also cannot ignore that there is a severe gap in the number of children in care and the number of licensed foster homes across the nation.  Already, over 75,000 children currently in foster care live in group homes or institutions.  Research and common sense tell us that children need the structure and support that a family provides.  Recruitment is one topic CCAI will be exploring this year during a May Congressional briefing in celebration of National Foster Care Month.

What’s new with federal child welfare financing?

In November 2009, there were over 40,000 registered lobbyists in Washington, DC.  Not one of these lobbyists was working without a bias for children in need of families.  Unlike big industries with money, orphaned children do not have a voice on the Hill or a presence in DC.  This is exactly the reason CCAI exists.  We represent the needs of children by using our unique relationship with Congress to cut through the noise of many voices who seek federal policymakers’ ears to ensure that the needs of orphans and foster children are heard.

Yesterday, a member of our Advisory Board and longtime supporter of CCAI, U.S. Rep. Jim McDermott (D-WA) introduced a bill to use revenue from a new online gambling tax for foster care programs.  McDermott’s bill will be a companion bill to a bill that will legalize online gambling.  There are several other bills currently pending in Congress that address federal financing for foster care.

Just earlier this week, President Obama signed into law the health care legislation which includes an extension to the Adoption Tax Credit.  The Adoption Tax credit was originally set to expire the end of 2010, however, this new provision increases the tax credit from $12,170 to $13,170 for adoptions occurring after January 2010, and extends the tax credit to the end of 2011.  CCAI will be releasing a 411 Report on the history and future of Adoption Tax Credit next month to give more information on why it was introduced and how it is working.  Be sure to check our website for this report.

Another hot item related to child welfare financing is President Obama’s proposed FY 2011 budget.  CWLA published a report to analyze how Obama’s proposed budget will impact federal financing of child welfare programs and services.

CCAI continues to monitor legislation that will impact foster care and adoption, as well as provide education and resources to policy makers as they work to introduce and pass legislation that will affect vulnerable children around the world.

Counting down to ‘FYI Season’

It’s no secret around here that summer is one of the most exciting and favorite times for CCAI.  With our programs in full swing, and almost as many interns as staff members, there’s a certain energy in the office that cannot be matched.

Now, those of us in DC are finally putting away our winter coats, driving around with our windows rolled down, and anxiously awaiting the cherry blossoms‘ peak bloom.  But we think what’s even more exciting  is that in just 2 months the 2010 FYI Class will be ascending on DC to start this year’s FYI program.

Picture of the 2009 FYI Class taken during the retreat to Danville, PA

Just earlier this week one of our FYIs from last summer called the office.  We’re privileged to not only share a life-changing  summer with these interns, but to also be included in their lives months and years after they return to their homes.  John Paul said something to us so touching that I asked him if I could share his thoughts.  I believe his words are powerful and speak to the influence of the FYI program much better than any CCAI staff member ever could.  John Paul said,

John Paul, left
‘When I came to the FYI program, it was different.  I had never experienced a program for former foster youth that treated us like capable adults or expected us to be able to surpass our peers.  Chelsea, Emily, Mark, Rebecca, and Kathleen pushed us and encouraged us when times got hard.  My supervisor from last summer and I still talk to each other and have lunch together when I visit DC. During the FYI program, I learned so much about myself and my abilities that I have been able to push pass the fear that I might not be good enough for the real world.  Every time things start to get hard or I start doubting that I can do something, I just remember the experiences I had with the FYI program and how I could do things I never thought I’d be able to do.  I got the opportunity to do something that so few people my age get to do, let alone former foster youth.  Without the FYI program, I know that I would never be aware that I could be as good as anyone else, if not better.’

Please continue to check back as we continue to prepare for the arrival of 12 extraordinary students who will soon be making their way to DC to forever impact the lives of foster children as they too are forever changed.