Tax Credits and Adoption

Unlike many celebrities seeking international adoptions, one celebrity adopted two children from the United States.  Steven Spielberg, the noted film director, screenwriter and producer, adopted two African-American children from the Los Angeles foster care system and then went on to establish the Children’s Action Network (CAN), a non-profit organization that is dedicated to finding permanent homes to the thousands of children in foster care and improving the outcomes for the more than 500,000 children in system, as well. 

In recent years, international adoption has become vastly popular by celebrities, with the much hyped adoptions of Angelina Jolie’s and Madonna’s children.  The number of healthy newborns and infants available in this country has been decreasing in recent years.  Because of this, more and more U.S. citizens have pursued international adoptions.

Nevertheless, in the United States alone, there are 500,000-600,000 children that live in our foster care system, with over 200,000 awaiting  permanent homes.  Beginning in the 1990’s, legislative measures were passed by Congress aimed at assisting those children in the system.  The Adoption Promotion and Stability Act of 1996 provided a tax credit available for those individuals who adopted foster care children, with the credit rising as high as $13,360 per child in some years.  In a controversial 5-4 decision, the Supreme Court upheld the constitutionality of the Patient Protection and Affordable healthcare legislation, better known as Obamacare.  One part of this legislation is the extension, expansion and enhancement of the adoption tax credit provided by the federal government, with legislation introduced this year that would not only expand the credit, but make it permanently refundable as well. 

When an international adoption takes place, although the tax credit wasn’t meant for foreign children, those adopting receive the same tax benefits as those who adopt domestically.  Though international adoptions may add to the diversity of our nation, the intended beneficiaries of the tax credit legislation are those “lost in the system” children in this country’s foster care system.  There are those who feel the tax credit should be used to reclaim children from the foster care system, not subsidize international adoptions.  Accordingly, they feel  the international portion of the tax credit should not be renewed, but allowed to expire, in order to turn taxpayer resources, once again,  back to those whom the credit was aimed for – the children in the foster care system.

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