Children can be a real tax blessing. And if your family grew thanks to an adoption, you can be extra thankful for the enhanced adoption tax benefits available for the 2011 tax year.
A provision in the health care reform law expanded the adoption expense amount that can be claimed as a tax credit. It also increased the amount that can be excluded from your income if your employer helps pay for the adoption expenses.
The current adoption credit is worth a maximum of $13,360 per eligible child.
Even better, the credit claim now is refundable. That means if you don't owe any tax, the credit amount can be used to get you a refund from the IRS. Any prior year adoption credit that was not refundable then and that you carried forward to 2011 can also be paid back to you as a refund.
The refundable component, however, is available only for the 2011 tax year unless Congress extends it.
And when 2012 rolls in, the maximum credit and income exclusion amounts also will be reduced, again unless lawmakers decide to extend the current law.