I want to thank all of you who wrote state representatives about saving the Adoption Tax Credit! After doing some research online and exchanging several email with my wonderful family member who is an accountant, I found the following information.
Although they did not make the credit refundable (credits that are "refundable" allow you to take a credit higher than the actual tax you owe), it is now a permanent credit, which means it won't have to be renewed every so often. While official figures will be released later by IRS, the projected maximum amount of the adoption credit for 2013 is estimated to be $12,770. All families, whether they adopt from foster care, privately or internationally, can carry their credit forward to other tax years if they don’t have enough tax liability to use it all at once. The key is, you must have tax liability to be eligibile for the Adoption Tax Credit.
For example, say you are eligible for a credit ofd $10,000, and you have $8,000 in tax, the adoption credit reduces your tax to $0, giving you back all of your withholdings. You then receive that credit in the form of a refund (assuming you do not owe anything). Then, the following year, I believe you can take the additional $2,000 leftover ($10,000 credit - $8,000 tax from previous year) and apply it to that year's taxes, assuming you have at least $2,000 in tax liability.
Clear as mud? I know it is confusing, but to make things more understandable, I recommend looking at your own previous year's federal tax forms. Apply the scenario I wrote above to your own situation, and hopefully it will make more sense! Comment with questions if you'd like.