Sens. Casey, Blunt introduce bill to make adoption tax credit refundable

U.S. Sens. Bob Casey (D-PA) and Roy Blunt (R-MO) introduced last week the Adoption Tax Credit Refundability Act to make the current adoption tax credit fully refundable.

The adoption tax credit was made permanent in the American Taxpayer Relief Act in January 2013. The law did not, however, extend the refundability provisions that applied to the adoption tax credit in 2010 and 2011. This bill will restore the refundable portion for families wishing to adopt.

“It is a common misconception that only wealthy families adopt,” Casey said. “We must do all we can do to ensure that all children are afforded the opportunity to grow up in a permanent, loving home. This legislation is a commonsense approach to improve lower-income families’ ability to adopt and support children from foster care.”

The Department of Health and Human Services reports that one-third of all adopted children live in families with annual household income at or below 200 percent of the poverty level. Nearly 46 percent of families adopting from foster care are at or below 200 percent of the federal poverty level. Many of these families’ tax burdens are so low that they cannot benefit from the adoption tax credit at all unless it is refundable.

“Millions of children in our country and around the world are waiting for the safe, stable home and loving family that every child deserves,” Blunt said. “Making the Adoption Tax Credit permanent was an important step to encourage more families to adopt. Restoring the refundability portion of the credit will build on that progress by making adoption more affordable for hardworking families. I’m encouraged by the bipartisan support we’ve received for this bill, and I’ll continue advancing policies that make it easier to connect children in need of homes with families that are eager to adopt.”

In 2011, 62 percent of families who filed for the adoption tax credit benefited from refundability. Forty-one percent of families who benefited from refundability had annual gross incomes under $50,000. This shows that that a refundable adoption tax credit plays a significant role in lower-income families’ ability to adopt and support a child from foster care.

The cost of adoption is also significantly lower than the cost to federal, state and local governments to provide long-term foster care, the bill’s sponsors said.

The legislation has been endorsed 116 national, state and local groups.