Wednesday, March 14, 2012

Our experience with the Adoption Tax Credit (ATC)

It's tax time again and in a follow up to my recent post about the ATC I'd like to share our experience with it last year.  Last year was the first year that they changed the "credit" to a refund whereas you did not have to wait to get the full amount but could get it all as a lump sum in one year. 

With our first adoption we got it in bits and pieces over three years.  In the past the credit was just that, a credit.  You could only receive the amount that you owed in taxes that year and no more.  Now you can receive the refund no matter what your tax burden is as long as you meet all of the other requirements. The paperwork needed is much more specific now than it used to be and it quite burdensome. 

Of course, last year was the first year so no one (including me) knew exactly what they wanted.  When we filed originally I only sent our placement paperwork and a copy of ND's assignment of an ATIN.  This was definitely not enough.  Documents showing exactly what you have paid and to whom are also now required.  We obtained an affidavit from our attorney, billing statement from the agency we used for E's counseling, and our bank statements. 

We received the first part of our refund not related to the ATC about a month after filing. The other new part of the ATC is the requirement to paper file.  Everything had to be mailed.  After getting the first part of our refund we got a letter from the IRS about 2 weeks later asking for additional paperwork for our adoption.  I gathered it all and faxed it.  I must have also called ten times at least.

Once all that was sent we still heard nothing for about 6 weeks.  Long story short, I ended up contacting a Tax Advocate to help get our stuff pushed through.  I am not sure it helped but we did get our refund about 4-weeks after that.  I highly recommend that anyone filing for the ATC call and call and call until you get it.  Find out where your case is being handled (what office).  Call and make sure your fax/mail was received.  Call and make sure the reviewers have it.  Get an TA like we did if you really need to (you must have a financial hardship related to your adoption expenses). Yes, you're being a pain and holding up the process (according to the IRS) but so many families had their paperwork lost last year, or sent to the wrong office, it really is best to just bug them to death.  Or maybe that is just my personality?

Oh!  And when you send anything make sure you use tracking through the USPS or Fe*dEx. That way you know exactly when it arrives and have proof that it got there.

Any questions?

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