America World Adoption News

Adoption Tax Credit – Filing Your Federal Income Tax Return

With the approach of tax season, I’ve been asked several questions about the adoption tax credit. These answers may be helpful to you. Please feel free to give me (Les Gallagher) a phone call or send me an email if you have any questions. My phone number is 703-891-3282 and my email address is les.gallagher@awaa.org. You may also want to consult with a tax advisor.

• Adoption tax credit form: You will complete Form 8839 to claim an adoption tax credit. For more information please read IRS Topic 607- Adoption Tax Credit and Instructions for Form 8839 – Qualified Adoption Expenses.

• Documenting adoption costs: Your cancelled checks and credit card statements are the documents you’ll need in order to substantiate the amounts shown in your income tax return Form 8839 as deductions. Although you won’t include these with your tax return.

• Adoption order or decree: You will need to attach a copy of your adoption order or decree to your completed Form 8839. The adoption tax credit can be claimed in the year that your adoption is finalized.

• Adoption tax credit - amount: The adoption tax credit for 2012 is 12,650 per child, but is not refundable as it was in 2011 and 2010. A tax credit means that qualified adoption expenses will reduce your Federal income tax liability up to the entire amount of your income tax liability. (Refundable means that qualified adoption expenses will be fully reimbursed up to the limit by the IRS regardless of the amount of your Federal income tax liability.) Adoption tax credit amounts that remain unused in any year can be carried forward to reduce Federal income tax liability in subsequent years.

• Social Security number: Each child is required to have a social security number in order to qualify for the adoption tax credit.

• Special needs adoption: A special needs adoption is one in which the state or county child welfare agency has determined that the child is not likely to be adopted unless the government provides assistance to the adoptive family.

• Grants and donations: You will not include grants received from granting agencies or donations received from family and friends through the Eternal Family Program in your income. Likewise, the adoption costs that the grants and donations were used to pay for will be excluded from your qualified adoption costs in claiming the adoption tax credit.

Adoption Taxes

As we approach the end of the year, you may find these Q&A's from the IRS helpful regarding the adoption credit.

http://www.irs.gov/Individuals/Adoption-Credit-Phone-Forum-Questions-and-Answers

Returned Checks

Dear AW families,

Recently we received check stock that have errors in the micro encoding. This has caused several checks we issued on August 9 to be returned. If you experience any problems with a check from us on that date please call me at (703) 891-3282 or Mike Mank at (703) 891-3135 or send us an email at les.gallagher@awaa.org or mike.mank@awaa.org. We’ll issue you a replacement check including any bank fees you incurred. I apologize for the inconvenience and trouble this has caused you.

Sincerely,

Les Gallagher, CFO

CFO Notes - Adoption Tax Deduction and Receipts

Tax season is here, and as you begin filing, please keep this in mind.

The primary source documents (i.e. receipts) to substantiate your adoption tax deduction are copies of your cancelled checks, bank statements and credit card statements. These documents should not be sent to the IRS when filing your tax return.  You only need to provide the IRS with a copy of the adoption decree along with Form 8839 at the time of filing.  However, if you are audited by the IRS, then you will need to send these documents to them.

At the time of an IRS audit, in the case where a family did not retain or is unable to obtain primary source documents, America World will provide a list of the payments the family made to AW in an attempt to satisfy the documentation requirements of the IRS.

You can also refer to your Welcome Home packet, the tax information section.

Please email me, Les Gallagher, if you have any further questions, or consult a tax professional.

Waiting - Trust in His Promises

As adoptive parents, my wife and I, like you, know the prayers of adoptive families during the long wait.  My wife, Connie, wrote this prayer today with the hope that a reflection on His promises will strengthen your family.

Please be encouraged by AW’s prayers for you.
-- Les Gallagher, CFO

Waiting

As You suspend the stars in the heavens,
The planets in their corridors,
Hold this child in check
In the distant orphanage.

As you deliver one season into the waiting arms of another,
Winter melting into spring through the ages,
Move this child along in Your perfect timing
To the longing embrace of adoptive parents.

And as You keep the generations of Your little creatures
Dry and fed, concealed in nature,
Calling to each other with neither thought nor concern,
Keep this child safe, answer his wonderings with trust.

And as You replenish the dry earth with rain,
Refilling the parched waterways with Your graciousness,
Soften the hardness of his hurts.
Prepare him for new life!

As You build families like galaxies,
Provide widows, the childless with prophets,
Speak through donkeys and angels and tongues of fire
“Do not be afraid!”
Speak peace and promise to the hearts of the waiting.

Come, Lord Jesus, Come!
Cross the sea on dry land.
Crumble the ancient walls.
Slay the enemies’ giants with Your Spirit.
Conquer the darkness with your mercy and grace.
Bring our child home!

-- Connie Gallagher   July 8th, 2011

Online Payment Maintenance

During the upcoming weekend (June 25 – 26) our on-line service provider will be completing system maintenance.   Therefore, you may experience a disruption when you try to make an online payment.  However, the actual maintenance will take less than two hours, so please just make your payment a bit later on. 

I’m sorry for the inconvenience.  If you have any questions, then please send me an email at les.gallagher@awaa.org or call me at 610-246-5650.

I hope you have an enjoyable weekend.

Les Gallagher, CFO

Reconstituted Eternal Family Program

You may remember that at the beginning of 2010, America World put its Eternal Family Program on hiatus in order to properly review it from a tax perspective.

As of January 1st, 2011, we have reconstituted the Eternal Family Program, whereby all adoptive families are now eligible to participate in this program, without the need to fill out an application.  Even better news is that there is no longer a cap on the amount of contributions your family can receive for your adoption based on household income.  That's right: the sky is the limit! 

100% of all contributions will go to the intended family's adoption costs.  (America World will accept contributions on your behalf but suggests the amount claimed as a tax deduction by donors, if any, should be discussed with a tax professional.)  We simply want to act as a conduit for other's contributions to your adoption. 

Our desire with this program is a marriage of two important ideas: 1) to help families be able to finance their adoption and 2) to give practical opportunities for others to fulfill our Lord's mandate to care for and support orphans.

Many of you probably received Les Gallagher's (America World's CFO) email last night.  I think he said it best that: "We are excited to offer this program as a mechanism for family, friends, and the surrounding commmunity to support and partner with adoptive families."

You can view and download the Eternal Family Program packet (which includes a more detailed explanation of the program, a sample letter and a contributor form) by clicking on this link: http://www.awaa.org/downloads/development/eternal_family_program.docx or by requesting this information from one of our staff.

Please don't hesitate to contact me (at jason.west@awaa.org) or Les Gallagher (at les.gallagher@awaa.org) if you have any questions regarding this valuable program.

I pray that many families find the Eternal Family Program to be a blessing as they work to bring their sons and daughters home!

In Him,

Jason West, Director of Development