Potential Sibling Adoption in central Arkansas

Please all be praying for a set of three siblings aged 4-12.  These three kids need a good family to take them in and be there for them.  Please email me directly for more information if interested.  shane@shafirm.com

FAQ about Arkansas Adoption Tax Benefits

Adoption Benefits FAQs

Q.1 What is the adoption credit?

A. The adoption tax credit offsets qualified adoption expenses, making adoption possible for some families who could not otherwise afford it. Taxpayers who adopt a child may qualify for an enhanced adoption tax credit for tax year 2011.

Generally, you may qualify for the adoption credit if you adopted a child and paid qualified expenses relating to the adoption. The amount of the tax credit is as much as $13,360 for 2011. If you attempt to adopt a U.S. child, you may be able to claim the credit even if the adoption does not become final. If you adopt a U.S. child with special needs, you may qualify for the full amount of the adoption credit even if you paid few or no adoption-related expenses, if the adoption is final. A child is a U.S. child if he or she was a citizen or resident of the United States (including U.S. possessions) at the time the adoption attempt began.

For 2011, you may not get the full amount of the adoption credit if your modified adjusted gross income (MAGI) is more than $185,210 and the credit is completely phased out if your MAGI is more than $225,210.

Q.2 What is the income exclusion for employer-provided adoption benefits?

A. You may be able to exclude from your income amounts paid to you or for you by your employer under a qualified adoption assistance program. You may qualify for the income exclusion if you adopted or attempted to adopt a child and the program paid or reimbursed you for qualified expenses relating to the adoption. The amount of the exclusion is as much as $13,360 for 2011. Special rules apply for when to exclude the income for foreign adoptions.

For 2011, you may not get the full amount of the exclusion if your modified adjusted gross income (MAGI) is more than $185,210 and the credit is completely phased out if your MAGI is more than $225,210 or more.

Q.3 What are qualified adoption expenses?

A. Qualified adoption expenses are reasonable and necessary adoption fees. They include: court costs, attorney fees, traveling expenses (including amounts spent for meals and lodging while away from home), and other expenses directly related to the legal adoption of an eligible child.

Expenses paid in an unsuccessful attempt to adopt an eligible child before finalizing the adoption of another child can qualify for the credit.

Qualified adoption expenses do not include expenses: for adopting your spouse’s child, for a surrogate parenting arrangement, that violate state or federal law,   paid using funds received from a federal, state, or local program,  paid or reimbursed by your employer or any other organization, or  allowed as a credit or deduction on a federal tax return.

You cannot claim a credit for the same adoption expenses used to claim the income exclusion.

Expenses connected with a foreign adoption (where the child was not a U.S. citizen or resident at the time the adoption process began) qualify only if you actually adopt the child.

Q.4 Who is an eligible child?

A. An eligible child is:  a child under the age of 18, or an individual who is physically or mentally incapable of caring for him or herself.

Q.5 What did the Patient Protection and Affordable Care Act (PL 111-148) also known as the Affordable Care Act) change about the adoption credit?

A. Before the Affordable Care Act became law, the adoption credit was generally set to expire at the end of 2010. The credit was nonrefundable, but you could carry any unused credit forward up to five tax years.

The Affordable Care Act made the credit refundable for 2010 and 2011 and increased  the maximum adoption credit and the amount you can exclude from income to $13,360 per child for 2011.

Q.6 What is a Refundable Credit?

A. A nonrefundable credit can reduce the amount of tax you owe (your tax liability) to zero but not below. A refundable credit can reduce your tax liability to zero and IRS pays back (refunds) any remaining credit to you.  For example, if your tax liability is $10,000 and your credit is $12,000, with a nonrefundable adoption credit you would reduce your tax liability to zero and carry the remaining $2,000 credit forward.  With a refundable adoption credit, you reduce your tax liability to zero and also receive a refund of the $2,000 by which your credit exceeds your tax liability.

Q.7 I have a carryover from earlier years.  Is the carryover amount refundable in 2010?

A. Yes.  If you carried forward an adoption credit from 2005 or later (because the credit was more than the tax you owed), you can claim the carried-forward amount as a refundable credit in 2010. You can find the amount of any unused carry forward amount on line 23 of the worksheet on page 5 of the 2009 Form 8839, Qualified Adoption Expenses.

Q.8 When do I claim the adoption credit?

A. The following tables explain when to take the credit:

 

 Adopting a child who is a U.S. citizen or resident.
 IF you pay qualifying expenses in…  THEN take the credit in…
 Any year before the year the adoption is final  The year after the year of the payment.
 The year the adoption is final  The year the adoption is final.
 Any year after the year the adoption is final  The year of the payment.

 

 Adopting a foreign child.
 IF you pay qualifying expenses in…  THEN take the credit in…
 Any year before the year the adoption is final  The year the adoption is final.
 The year the adoption is final  The year the adoption is final.
 Any year after the year the adoption is final  The year of the payment.

Q.9 When do I exclude employer-provided adoption assistance from my income?

A. The following tables explain when to exclude employer-provided adoption assistance from your income:

 Adopting a child who is a U.S. citizen or resident.
 IF your employer pays for qualifying expenses under an adoption assistance program in…  THEN take the exclusion in…
 Any year  The year of the payment.

 

 Adopting a foreign child.
 IF your employer pays for qualifying expenses under an adoption assistance program in…   THEN take the exclusion in…
 Any year before the year the adoption is final  The year the adoption is final.
 The year the adoption is final  The year the adoption is final.
 Any year after the year the adoption is final  The year of the payment.
 Note: If your employer makes a payment in a year before the adoption is final, you include the amount in your income for the year. When the adoption is final, exclude the amount from your income on your return for that year.

Q.10 How do I claim the credit or the exclusion?

A.
 To claim the credit for 2011, attach both Form 8839 and the required adoption-related documentation to your federal tax return. You cannot file a tax return with the adoption credit electronically. You must file a paper tax return because you need to attach the supporting documents.

Refer to Form 8839, Qualified Adoption Expenses and the Form 8839 Instructions and chart for additional information.

Q.11 What documentation will the IRS require you to provide to support  your claim for the adoption credit on your return?

A. IRS requires different documents if the adoption is foreign or domestic, final or not final, and if the adoption is of a child with special needs.

Q.12 What records should I keep to claim the adoption credit or the income exclusion?

A. Keep the following documents to make sure you get any credit that is allowable:

Receipts for qualified adoption expenses, entry visas for foreign adoptions, final decree, certificate or order of adoption, home study by an authorized placement agency, child placement agreements or court orders, and determination of special needs status by a State or the District of Columbia.

Q.13 What audit documentation is necessary for special needs adoptions?

A. If you are claiming the credit for a finalized special needs final adoption, you must submit the final adoption order or decree, and the state’s determination of the child’s special needs. You are not required to prove you paid any expenses in connection with the adoption.

You will need to send in a state court adoption certificate, order, judgment, or final decree showing the names of the adoptive child and parent and signed by a representative of the state court under seal. Also include documentation from the state establishing that the child has been determined to have special needs. . Acceptable documentation of the state’s determination of special needs includes (but is not limited to) any of the following:

  • An adoption assistance or subsidy agreement issued by the state or county
  • Certification from the state or county child welfare agency verifying that the child is approved to receive adoption assistance
  • Certification from the state or county child welfare agency verifying that the child has special needs

Q.14 How long will it take IRS to process my return and refund the Adoption Credit?

A.  Processing times vary. The adoption credit, at up to $13,360 per child, is the largest refundable tax credit available to individual taxpayers. We require taxpayers claiming the credit to file paper returns and attach supporting documents with the Form 8839 to their tax return.

It is necessary for the IRS to review the documents submitted. Normally, for a tax return claiming the adoption credit, it takes about six to eight weeks to get a refund claimed on a complete and accurate paper return, where all required documents are attached.

3 different criminal attorneys stabbed by client

CRIMINAL JUSTICE

Defendant Loses Right to a Lawyer After Allegedly Stabbing 3 of Them with Pencils or Pens in Court

Posted Nov 2, 2011 5:55 AM CST
By Debra Cassens Weiss

Updated: A man has been convicted of drug charges after a judge in Washington state declared that pencil-and-pen-packing defendant Joshua Monson forfeited his right to counsel because of three attacks on his lawyers during court hearings.

None of the lawyers was seriously hurt. In the first two incidents, which occurred less than a week apart, Monson was accused of stabbing two different lawyers with pencils he smuggled from jail, HeraldNet.comreports. On Tuesday, Monson grabbed the pen being used by his defense lawyer, Jesse Cantor of Everett, Wash., and stabbed Cantor in the head, witnesses said.

The attack occurred Tuesday as prosecutors gave opening statements in Monson’s felony drug trial in Snohomish County. Corrections officers set off an electric stun cuff on Monson’s leg as he lunged for the pen and then piled on top of him, the story says. The first person to reach Monson was a police officer seated at the prosecution table.

Judge David Kurtz said Monson would have to defend himself without a lawyer and would be strapped to a special chair for the rest of the trial. Kurtz advised jurors to ignore the incident, the restraints and the lawyer’s absence.

HeraldNet.com reported that Monson was convicted of drug possession Thursday while in the restraint chair. “A standby defense attorney from King County sat through the hearings to answer Monson’s legal questions,” HeraldNet.com wrote. Monson was not allowed to sign court documents with a pen or pencil.

HeraldNet.com also notes that Monson will be back in court again to face second-degree murder charges and, separately, two fourth-degree assault charges for the alleged attacks on his attorneys.

Updated Nov. 4 to report that Monson was convicted.

World’s Youngest Judge?

LAW IN POPULAR CULTURE

Indiana Lawyer Who Started His Legal Career as a 17-Year-Old Judge Gets the World Record

Posted Oct 31, 2011 4:30 AM CST
By Debra Cassens Weiss

Indiana lawyer Marc Griffin has claimed the title once held by a Texas man: Guinness World Records has declared that Griffin holds the record for being the world’s youngest judge.

Griffin was an enterprising 17-year-old high school graduate in 1974 when he persuaded county commissioners to appoint him to fill a vacancy for justice of the peace. Griffin later won re-election to the job that included presiding over some civil and criminal cases, as well as performing weddings. “I was marrying people, throwing people in jail, and fining people,” he recalls.

Griffin managed to snag the job at such a young age because of his realization that his township had a long-time vacancy for a justice of the peace. The last justice of the peace had died some 50 years before, and the position was never filled. Cases for the township were being handled by other justices of the peace in the county.

“I discovered this justice of the peace thing,” Griffin recalled in an interview with the ABA Journal, “and I thought, ‘Wait a minute, we need another court and I’m qualified.’ ” He requested a meeting with the county’s three commissioners, and persuaded them to recommend his appointment. The state’s governor concurred and gave him his commission.

Griffin learned of the vacancy because of his interest in the law while still in high school. “I knew I wanted to be a lawyer,” Griffin says, “so I used to sit and read statutory law. Some people read novels, some people read sports magazines. I would just sit and read Indiana law.”

Speeding tickets were a big part of Griffin’s docket because the highway speed limit had recently dropped from 70 to 55 miles an hour. He held court at all hours of the night when police needed authority to lock up suspected domestic abusers. But it was the weddings he performed and an attorney general’s opinion that garnered national news coverage. Griffin was marrying people even though he was himself too young to marry without parental consent, a fact noted by critics.

The state attorney general opined that Griffin was too young to hold office. An Associated Press “fun-sy” story reporting on the decision questioned whether the people Griffin had married were “living in sin” because their weddings were illegal, Griffin says. The legal dispute was put to rest when a circuit court found Griffin qualified to hold office, paving the way for a short-lived judicial career.

The state eliminated justice of the peace courts a year or two later. Griffin finished his education and got a law degree from Indiana University School of Law. He has a niche practice representing banks and insurance companies that obtain liens on properties through tax sales.

Griffin contacted Guinness after he read an article at ABAJournal.com about a Texas man who held the record for winning election as a justice of the peace at the age of 18. Griffin supplied Guinness with evidence verifying his appointment at age 17, and learned last Thursday that he is the new world record holder. A press release dispatched to the ABA Journal the same day announced his achievement.

Griffin says in the press release that he contacted Guinness 37 years after the fact because he didn’t realize the publication covered judicial records. “I thought they were just records of stunts, like doing the most jumping jacks,” he says in the release.

Arkansas NonProfits and 501(c)3 Federal Form 990 Update

Form 990 Requires Diligence and
Thoroughness

 

The IRS has issued final regulations related to
the recently redesigned Form 990 (Return of Organization Exempt From Income
Tax
), which is required for most tax-exempt entities. Not surprisingly, the
final regulations generally follow guidelines established by proposed
regulations in 2008. The sweeping changes approved by the final regulations take
effect on September 7, 2011, and generally apply to tax years beginning on or
after January 1, 2008.

 

New Form IRS 990 Digs Deep

The new Form 990 is designed to increase transparency
of tax-exempt organizations. It requires extensive reporting about governance
and management policies, as well as the organization’s
relationship with board members, officers and key employees.

Currently, the entire Form 990 must be filed for an
organization with gross receipts of $200,000 or more and total assets of
$500,000 or more. An organization that fails to file Form 990 for three
consecutive years will lose its tax-exempt status.

The information an organization must obtain from
board members, officers and key employees includes answers to these
questions:

  • Did any of their family members engage in
    business transactions with the organization?
  • Did they (or their families) own more than
    35 percent
    of entities and engage in business transactions with the
    organization?
  • Did they do business, other than as a member
    of the general public, with another board member, officer, or key employee? Or
    did they do business or with an entity of which another board member, officer,
    or key employee is a director, officer or more-than-35 percent
    owner?
  • Did they have a family relationship with any
    other director, officer or key employee of the organization?
  • Are they a director, officer, or greater than
    10 percent owner of an entity of which another of the organization’s
    directors, officers, or key employees is a director, officer or more-than-10
    percent
    owner?

 

 

 

Here are some of the key areas addressed by the new final
regulations (TD 9549), and how they compare with the earlier proposed
regulations:

 

Advance ruling process –
Previously, an organization seeking to be recognized by the IRS as a publicly
supported charity had to complete a two-step process. First, the organization
was required to declare that it expected to remain publicly-supported on a
consistent basis. Second, after five years had passed, the organization had to
file Form 8734 (Support Schedule for Advance Ruling Period) showing
that it had satisfied this test.

The proposed regulations treated an organization as a
publicly supported organization in its first five years if it could show on its
application that it reasonably expected to receive the required public support
during this period. Now the new final regulations follow suit. This effectively
eliminates the advance ruling requirement.

Public support test – This test requires an
organization to receive more than one-third of its support each tax year from
qualified gifts, grants, contributions or membership fees, or gross receipts
from activities that are not an unrelated trade or business.

The proposed regulations changed the period for determining
public support from the four years prior to the tax year being tested to the
five years ending with the tax year being tested.

Under the final regulations, an organization that fails the
public support test for two consecutive tax years will be treated as a private
foundation for limited tax purposes. The organization will be treated as a
private foundation for all tax purposes beginning on the first day of the third
consecutive tax year.

Accounting methods – One of the goals of
redesigned Form 990 is to provide consistent tax and financial reporting.
Accordingly, if an organization computes its public support and reports the
information on Schedule A (Public Charity and Public Support), the
proposed regulations required it to use the same accounting method to report the
information on Form 990. The final regulations continue this treatment.

Reliance – As with the proposed
regulations, the new final regulations allow donors to rely on an organization’s
determination letter that it is a public charity unless the donor was
responsible for, or aware of, any action resulting in the loss of the status.

The final regulations also restore language that was
inadvertently deleted from the proposed regulations giving limited grantor and
donor reliance based on a written statement from the organization.

 

Compliance with the new final regulations is essential for
tax-exempt groups. Filing Form 990 can be a complicated process and it requires
diligence and thoroughness. Your tax adviser can provide assistance and more
information about how the regulations affect your
organization.

 

Arkansas NonProfits: Remaining Tax Exempt.

Full Article by Professor Tim Tarvin

Neat video about “The Van Man!”

The One, Inc. (a.k.a. The Van) on THV News!

facebook.com/ArkansasAttorneys

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Conway Men’s Chorus Spring Concert 2011

The Conway Men’s Chorus will perform its Spring Concert 2011 at Reynolds Performance Hall on the campus of the University of Central Arkansas Tuesday night at 7:00 p.m., May 3, 2011.

Free admission.  Everyone is welcome.

Conway Office – New Address!

The Conway office of SH&A has moved.  Our attorneys are now found at 335 Hogan Lane, Suite 100, in Conway, Arkansas. We have expanded our operations to provide better service to our clients.

We hope to see you soon.