The Hope for Children Act

On June 7, 2001 the US House of Representatives passed the Hope for Children Act by a vote of 420 to 0. This Act expanded the adoption tax credit to $11,390 for all adoptions, enabling thousands of people to adopt who otherwise wouldn't be able to. We at HOPE for Children are particularly proud of the passage of this Act because it was named after our agency! A champion of the Act, then Senate Majority Leader, Newt Gingrich asked our agency for permission to name it the Hope for Children Act.

Q & A

What is the Hope for Children Act?

The Hope for Children Act (H.R. 622) (named after our agency) is legislation which increased the adoption tax credit to $11,390 for all adoptions, domestic and international, and increased the employer adoption assistance exclusion to $11,390. The Hope for Children Act was signed into law by President Bush on June 7, 2001 and took effect as public law on January 1, 2002.

Will a $11,390 tax credit be enough?

The Hope for Children Act is a healthy start to ensuring more children find a loving home. While some adoptions will cost well over $11,390, raising the limit will aid more families in their efforts to adopt a child in need. The Hope for Children Act is indexed for inflation to ensure that the tax credit and income limitations continue to rise alongside the cost of living. Additionally, the full credit can be claimed for adjusted gross income (AGI) of up to $150,000 and is gradually phased out for incomes between $150,000 and $190,000. The tax credit exempts the beneficiaries from the Alternative Minimum Tax.

How does the Hope for Children Act affect special needs adoptions?

The $6,000 adoption tax credit for special needs children is permanent law. However, the tax credit can only be utilized for qualified adoption expenses. The Hope for Children Act provides a flat $11,390 credit for special needs adoptions to help families with one-time and ongoing costs such as mental health counseling, physical therapy and medical costs, transportation costs, and home modifications. States have their own definitions of special needs children and use determining factors such as the child's age, ethnic background, siblings, and mental, physical or emotional handicap.

How does the employer adoption assistance exclusion work?

The Hope for Children Act raises the exclusion amount to $11,390 and makes it permanent law. The exclusion parallels the tax credit in all forms.

How do I go about taking a Credit on my tax return?

The Adoption Tax Credit is filed on form 8839 (Qualified Adoption Expenses), entered on line 50 of the 1040 form and attached to your 2003 tax return. It is advised that you see a tax expert to ensure that your credit is properly filed.

When do I actually get to claim the credit?

Claims for the credit will be allowed in the taxable year following the tax year in which the expenses were incurred. However, if the expenses are incurred in the tax year in which the adoption becomes final, the expenses are allowable that year. An adoptive family that cannot use the full amount can carry forward any unused portion of the credit for up to five years. The Internal Revenue Service outlines "qualifying adoption expenses" as "reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses (including amounts spent for meals and lodging) while away from home, and other expenses directly related to, and whose principle purpose is for, the legal adoption of an eligible child."

Contact the IRS

Contact the Internal Revenue Services at 1-800-829-1040 with your specific questions.

Leader of the Hope Coalition

A group of House members committed to the passage of the legislation), Representative Jim DeMint stated,

"The Hope for Children Act will help to build more loving, stable families in America and send a strong signal all across our land that every child is a wanted child. Because of the high cost of adoption, many couples are prevented or delayed from moving forward in the adoption process. The Hope for Children Act will ease this financial burden and help make adoption a reality for those who want to open their hearts and homes to children in need."