Denise Richards entitled to Qualified Adoption Expenses Tax Credit?

the quarter rollJuly 12, 2011 40 year old mom and model, Denise Richards, welcomed a new baby to her home! Richards recently adopted a baby girl which means daughters Sami and Lola are going to have a new big sister duties to perform around the house. Richards asked Sami and Lola to help name the baby and together they came up with Eloise Joni. (Joni is the name of Richards' mother) What makes this adoption different from those of Angelina Jolie, Madonna, and Sandra Bullock for example? Denise Richards adopted a child from right here in the States.

Cost of adoption
Have you considered adoption? It is a extremely big decision for any family. From a financial perspective adoption an be out of reach for many families. Adoption.com says, "Agency and private adoptions can range from $5,000 to $40,000 or more depending on a variety of factors including services provided, travel expenses, birthmother expenses, requirements in the state, and other factors. International adoptions can range from $7,000 to $30,000."

There is some help though for families who are considering adoption. First, some companies have an adoption assistance program. That means that the company gives cash assistance, up to an amount per the company's policy, to the employee who is adopting a child. Secondly, there is a very generous tax credit available to families who adopt. It is called the Qualified Adoption Expenses Credit.

Help with adoption costs: "The Qualified Adoption Expenses Credit"
This tax credit allows families who adopt a qualified child to receive a credit for adoption fees, court costs, attorney fees, and travel expenses. A qualified child is someone under 18. The maximum amount of credit you can receive in 2011 is $13,360.00. Remember this is a refundable credit and is not the same as a deduction. A refundable credit first reduces the amount of tax you owe, then if the credit eliminates your tax liability (and there is still an amount of credit left) you can receive that back as cash, or in this case carry the remaining credit forward to reduce next year's tax as well.

Unfortunately, Denise Richards will not be entitled to the Qualified Adoption Expense Tax Credit because the credit begins to phaseout when your modified adjusted gross income exceeds $185,210.00. The credit is completely phased out when your MAGI exceeds $225,210.00. 

You can learn more about the adoption tax credit here.

 
The Quarter Roll is published to provide personal insights and opinions on everyday ways of saving and managing money, budgeting, and reducing debt. The Quarter Roll does not give professional accounting, legal, or investing counsel. The ideas, examples, and advice presented on this site are solely the opinion of the authors based on his or her personal experiences. All photos courtesy of The Quarter Roll, iStockphoto, or Dreamstime. All rights reserved. This site is best viewed when using Adobe Flash Player. the quarter roll magazine financial entertainment