Recent legal and tax changes in U.S. facilitate adoption from Ukraine (12/30/01)

Recent legal and tax changes in U.S. facilitate adoption from Ukraine

by Dr. Patrick W. Murphy

Adoption is a wonderful way to start a family or to add to an existing one. And adopting from abroad may actually be faster than adopting domestically. Ukrainian adoption authorities have a generally positive attitude toward adoptions from their country, especially by, but not limited to, Ukrainian Americans.

Recent changes in U.S. laws governing adoption, including from abroad, make this journey less difficult and time-consuming, and more financially affordable for most families.

The two major changes with respect to international adoptions are:

changes in the adoption tax credit, and
automatic citizenship for foreign-born adopted children.

For the past several years the U.S. Congress has allowed a tax credit of up to $5,000 per adoption for both domestic and international adoptions. From an adjusted gross income of $75,000 to $115,000 the credit was gradually reduced to $0. The credit also had a "sunset provision," meaning it would end on December 31, 2001, unless specifically extended.

The difference between an ordinary tax deduction and a tax credit lies in the fact that a tax credit reduces a family's tax liability one-for-one. For example, a tax deduction of $100 for business expenses might result in a saving of tax payments of only about $35. But a tax credit of $100 results in a savings from one's taxes of a full $100!

As part of the overall tax bill passed by Congress and signed by President George W. Bush in June, these provisions are drastically liberalized. The $5,000 tax credit itself is doubled to $10,000, and the phase-out yearly income range is raised to $150,000-$190,000. There is also no sunset rule, meaning this provision is permanent unless Congress expressly changes it.

The new $10,000 tax credit will only be effective for adoptions taking place on or after January 1, 2002. For adoptions taking place before this date, the tax credit of up to $5,000 prevails. However, expenses incurred in, say, 2001, are all credited against your 2002 bill as long as the adoption itself took place in 2002 or later.

The second major change in regard to international adoptions came about with the passage of the Child Citizenship Act of 2000. Under this new law a foreign-born child adopted by an American citizen automatically becomes a U.S. citizen upon entry into the United States. In the past, the adopted child had to be formally naturalized by the U.S. Immigration and Naturalization Service to become a U.S. citizen, even though the child's adoption in a foreign court was fully recognized under U.S. law. This anomaly led, at times, to some tragic and bizarre situations in which a grown-up child was deported to his country of birth after having committed a crime. As part of the punishment for resident aliens who were not naturalized U.S. citizens, young adolescents ended up getting sent back to the country of their birth whose language and culture they did not know.

Congress set out to rectify this situation with the Child Citizenship Act of 2000, which went into effect on February of this year. Under the provision of this act, an adopted foreign-citizen child under age 18 and in the United States on February 27, 2001, automatically became a U.S. citizen without any formal action being required by the U.S. Immigration and Naturalization Service (INS) or other U.S. agency, if he/she met certain requirements. Conferring U.S. citizenship automatically on all foreign-born adopted children under age 18 brought to the United States by their American citizen parents not only has eased the concerns and uncertainties of many American citizens about the status of their adopted children, but also has made the need, in a few cases, to re-adopt foreign-born children in an American court unnecessary.

The Child Citizenship Act has four main provisions, most of which are pretty automatic for a foreign child adopted and brought back to the United States.

At least one parent has to be a U.S. citizen, by either birth or naturalization.
The child must be under 18.
The child must be living in the U.S. in the legal and physical custody of the U.S. citizen parent, after having been admitted as a legal permanent resident.
The adoption must be final.

But this new law does not apply to everyone. Adopted young people age 18 or over already in the United States as of February 27, 2001, still need to go through the formal naturalization process and otherwise still can be deported if they commit a crime.

Although the children are naturalized automatically, the parents or children may still desire proof of their citizenship. In that case, parents can either apply to the INS for a Certificate of Citizenship, or to the Department of State for a U.S. passport. Either document serves as proof of U.S. citizenship. To obtain a Certificate of Citizenship, parents need to follow the same procedures that were in effect before February 27, 2001.

Specifically, for a child already adopted and legally brought into the United States (i.e., the child has a "green card"), the parents have to submit a Form N-643, Application for Citizenship in Behalf of an Adopted Child, together with a $125 filing fee and photographs of the child, to the INS district office or sub-office in the United States having jurisdiction over their place of residence. The parents do not have to submit any evidence already contained in the INS file, including translations of documents. Detailed rules for application for an INS Certificate of Citizenship, together with a downloadable version of Form N-643, can be found on the INS website: www.ins.usdoj.gov. The INS is working on simplifying the paperwork for kids arriving after February 27.

Parents can obtain a U.S. passport for their adopted child living in the United States by providing the following:

Evidence of the child's relationship to a U.S. citizen parent, i.e., for an adopted child a certified copy of the final adoption decree;
The child's foreign passport with INS's I-551 stamp or the child's resident alien card ("green card"); and
The parent's valid identification.

Parents do not need to acquire an INS Certificate of Citizenship first in order to obtain a passport. Detailed rules for obtaining a passport can be found on the website of the State Department: travel.state.gov.

It should be noted that the granting of U.S. citizenship is not contingent on the foreign-citizenship status of a child born abroad. Thus, a child assuming U.S. citizenship may or may not remain a citizen of the country of his birth. In the case of Ukraine, the adopted child does in fact retain his Ukrainian citizenship until the age of 18.

The U.S. government does not require any positive action on the part of the young person to remain a U.S. citizen upon reaching the age of 18. His U.S. citizenship remains automatic unless, as with any other U.S. citizen, he formally denounces it before a U.S. government official at some later date. It appears that in the case of adopted children from Ukraine, the Ukrainian government allows Ukrainian citizenship to lapse at the age of 18 unless the child formally applies to remain a Ukrainian citizen (which might result in the loss of his U.S. citizenship).

In practice this means that a child adopted in Ukraine by U.S. parents holds dual citizenship from the time he arrives in the United States until his 18th birthday, at which time it appears (it is hard to determine this exactly) his Ukrainian citizenship comes to an end.

For Ukrainian Americans who have adopted a child from Ukraine it is important to strictly adhere to the Ukrainian law that requires them to report on the conditions and well-being of their Ukrainian children annually for the first three years following the adoption. After the first three years, parents are requested to send a letter with photos at least every three years until the child has reached the age of 18. Furthermore, all Americans who have adopted from Ukraine are reminded that Ukrainian consular officials in the United States reserve the right to visit the adopted child in his home periodically until he turns 18.

Although this situation may make some adoptive parents a little nervous, in practice my company, Adoption Consultants International (ACI), is not aware of any case where a Ukrainian consul actually took advantage of his right of visitation. And the holding of two passports can be a positive advantage: the child uses his U.S. passport for all purposes, e.g., traveling in Western Europe, except for actually entering Ukraine. A Ukrainian visa costs $75, but a Ukrainian citizen with a valid Ukrainian passport has the right of automatic entry to Ukraine without any additional fees.

Another important change was brought about by the passage of the same Child Citizen Act of 2000. Previously, adoptive families had to provide proof of financial viability to support their adopted child. An American family had to complete a lengthy Federal Form I-864, also called the Affidavit of Support, with extensive financial documentation, to prove to the INS that no adopted child would live in impoverished circumstances now or in the future. As of July 2001 the Government no longer required families to fill out this form.

This information may have the positive effect of encouraging more Americans, especially those of Ukrainian heritage, to consider adopting from Ukraine. The paperwork for both the U.S. and Ukrainian authorities is complicated but straightforward. Both parents have to meet the child (in Ukraine), and be present during the formal court proceedings. In most cases, the parent staying behind can return to the United States with the adopted child within three to four weeks after the adoption.

There are wonderful children of all ages (up to age 16) available for adoption in Ukraine. Adopting older children has some real advantages. Our two children were nearly 8 1/2 when they were adopted, and are thoroughly integrated into American life. At the same time, because they were somewhat older, they well remember their Ukrainian background and are always interested in Ukrainian customs, traditions and not least, Ukrainian food.

Over the last two years, ACI has assisted in the adoption of more than 25 children from Ukraine, ranging in age between 16 months and 11 years. These children are not only bringing joy and happiness to their Ukrainian American families, but they have also given their parents a wonderful opportunity to experience first-hand the country of their ancestors - a country with a rich history and an increasingly bright future.

Dr. Patrick W. Murphy is the general manager of Adoption Consultants International, a registered adoption services provider in Maryland. Dr. Murphy spent several years with the State Department's Consular Bureau and with the INS. His wife, Marlies Backhaus Murphy, is the executive director of ACI and has assisted in about 25 adoptions. The Murphys themselves have two adopted children from Ukraine. For further information, please call (301) 469-9755 or e-mail [email protected].

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