Posted by: icmadoptionnetwork | May 31, 2013

IRS Audits and the Adoption Tax Credit

Over the last several weeks, there have been some very disheartening stories of the IRS targeting non-profits and religious organizations. I am sure that you have all heard this in the news. How does the issues happening within the IRS affect you? Well this week some other unsettling information was released.

According to IRS statistics, approximately one percent of all returns are audited. However, in 2012, 69 percent of adoptive families (totaling more than 35,000) that were applying for the adoption tax credit were audited at least partially.

A report completed by the IRS’ Taxpayer Advocate Service stated that “The IRS’s misguided procedures, and its failure to adequately adjust these  processes when it learned its approach was seriously flawed, have caused  significant economic harm to thousands of families who are selflessly trying to  improve the lives of vulnerable children.”

The National Taxpayer Advocate recommends that the IRS  give examples of adoption credit documentation for taxpayers so that requirements are better understood and to allow electronic filing of adoption tax credit returns (which is currently not permitted).

Read more:

Adoptive families are always encouraged to keep detailed and diligent records of their adoption expenses. Here at ICM, we send out both an invoice and then a follow-up receipt once the bill has been paid. Please keep both of these documentations. Also, if the IRS ever comes to your family and asks for additional documentation from our offices, we are more than happy to provide it for you. Be sure to keep all receipts of every bill paid during your adoption experience. That way, if your family is even partially audited, you will be more than prepared to respond to the IRS.


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