Where’s My #!#% Refund?

Finalizing our youngest daughter's adoption on her fifth birthday.

Note: This is my family’s tax story, not to be confused with actual tax advice from a qualified professional.

I’ve mentioned before that we’re an adoptive family. We welcomed our “bundles of joy” to the family in 2005 (daughter age 7 from the USA, now 12.5) and in 2008 (daughter age 3 from Ethiopia, now 5.5).

There’s a cool little feature in the tax code that gives you a credit to help offset your adoption expenses.  When we adopted our first daughter, the credit amount was about $10,000 and with our second daughter, I think it was up to $12,000.  It doesn’t fully cover the cost of adoption, but offset 1/3-1/2 of costs in each case,and really made the process much easier–especially since we’d used a lot of debt to make these adoptions happen.

The problem is that if you don’t pay that much in taxes, you spread your tax credit over several years—each year, getting back everything you paid in, until such time that that you’ve run out of credit to take.

Except for this year. This year, the tax credit became refundable. This means that you can get back more than you paid in, or even go back, and amend prior year’s tax returns in order to take more of the standard deductions and roll more tax credit forward to this year.

Before the flame wars begin, let me be clear: I don’t agree with this particular bit of tax code. I think it must have been an accidental omission of language when this year’s tax code was written. The idea of giving families back more than they paid in, is outrageous and borderline on irresponsible federal spending.  This was an unexpected change in the tax rules, and we were not seeking handouts when we started this process.

With all of that said, I’m still filing to take advantage of it.

We re-filed four years worth of amended returns, each working out to be 136 pages long with full documentation –every receipt and statement and bill accounted for to justify our spending to go back and take standard deductions and roll forward more adoption tax credit.

The punchline:

The refund will be sufficient to pay off our last remaining debt (an adoption loan) and start our emergency fund, putting us 2-3 months ahead of our planned debt-free date.

Even though the check isn’t here yet, I feel 100 pounds lighter.

My thoughts feel clearer.

I feel free.  Like really, truly free.

The takeaway lessons to you are these:

1. Keep everything you ever use to  file your tax returns. One day the tax codes might change, and you’ll find yourself neck-deep in four-year-old receipts just wishing that you still had that medical bill or mileage record.

2. You too can stalk the IRS and see the status of your refund at Where’s My Refund? You’ll need to know the exact amount of your anticipated refund, your filing status and your social security number (for joint filers, use the social security number of the person whose name appears first on the return).

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  • Carmel

    I too think it is a little backwards for the federal government to refund more than was paid in, especially in these economic times. But, like you, I am not going to pass this opportunity up. We adopted two of our children last year and this refund is going to make our family debt free expect for 1 car payment. We didn’t expect this refund going in, but I won’t deny that it is a true blessing for our family.

  • http://www.thepennywisefamily.com Jessica

    Congratulations on your new children!! :)