Individuals and families that are claiming the adoption tax credit are not allowed to electronically file their returns, says a March 11 article on AccountingToday.com. The Internal Revenue Service (IRS) says that Form 8839, "Qualified Adoption Expenses," must be received via postal mail in order for the adoption tax credit to be processed. Families can still use tax preparation software to complete their returns, says the IRS.
The adoption tax credit was made permanent earlier this year, thanks to the legislation that helped the U.S. avoid the "fiscal cliff." Unlike in the previous two years, however, the adoption tax credit is no longer refundable.
"For 2012, the adoption credit is nonrefundable. A nonrefundable credit is subtracted from your
tax. It may reduce your tax to zero. If the credit is more than your tax, the excess is not refunded to you," according to the instructions for Form 8839.
For 2012, the maximum amount of the adoption tax credit is $12,650. Both domestic adoptions and international adoptions qualify a family to receive the adoption tax credit. Families who do not use the entire tax credit for adoption this year may carryover the remaining amount in future years.