As talk of tax increases and deep cuts to government programs dominate Washington, adoption advocates are warning of another crisis should the adoption tax credit be allowed to expire at the end of the year — a potentially “disastrous” outcome for more than 400,000 children in the U.S. foster care system.

Among the so-called Bush tax cuts set to expire at the end of 2012 is a one-time adoption tax credit that gave $12,650 this year to families who took in a parentless child. But unless Congress acts to extend it, the only tax credit for adoptive parents on Jan. 1, 2013, will be to those who take in special needs children from within the United States. For them, the credit will be just $6,000.

“And it’s really not going to do much,” said Chuck Johnson, president and CEO of the National Council For Adoption. “Most families adopting those kids won’t even qualify for it because of the strict income requirements. It really would be a credit unclaimed at that point and that could have pretty disastrous impact for kids awaiting adoption in foster care.”

Adoptive families already suffered a blow in the current year, when the credit stopped being refundable — payable even to families with little or no tax liability — and became merely a deduction.

Roughly 423,000 children are living in the United States without permanent families, according to the Congressional Coalition on Adoption Institute, and 115,000 of them are eligible for adoption. But nearly 40 percent of those children wait longer than three years in foster care prior to being adopted.

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Johnson told FoxNews.com he’s worried those figures will balloon if the adoption tax credit isn’t made inclusive, flat for special needs adoptions, refundable, and permanent — all of which would occur if the Making Adoption Affordable Act is passed.

“There are many families out there for whom it makes a tremendous difference,” Johnson said. “Not only does it encourage adoption, [the adoption tax credit] allows families to do that without being weighed down and encumbered by large amounts of debt, so they can start strong and make better provisions for their children.”

Sponsored by Sen. Mary Landrieu, D-La., the bill, if passed, would make the adoption tax credit a permanent part of the tax code and provide up to $13,170 for covered adoption expenses, adjusted for inflation. It would also make the credit refundable, allowing adoptive families to receive a tax refund in excess of their tax liability.

"For families who have generously opened their hearts and homes to a child, the Adoption Tax Credit gives them important assistance along the journey,” Landrieu said in a statement in September. “My husband and I are blessed with two precious, adopted children, and I am hopeful that this credit will encourage others to consider enlarging their families through adoption.”

Defraying costs of adoption via the tax credit is a “vital tool” to ensure that adoptive children become part of a stable family, Landrieu said.

“The costs associated with adoption can quickly grow, particularly when a child has special needs, and this credit helps families who otherwise might not be able to afford it maintain their economic security as they begin raising their children,” Landrieu’s statement continued.

The adoption tax credit — available through foster care, intercountry adoption and private domestic adoptions — was first established in 1997 and families who adopted children with special needs could claim the full credit since 2003 regardless of their qualified adoption expenses. And while many bills have been introduced to make the credit permanent, it has always been extended or amended as part of other legislation, including the Small Business Job Protection Act of 1996, the Economic Growth and Tax Relief Reconciliation Act in 2001, the Health Care and Education Reconciliation Act in 2010 and the Tax Relief Act in late 2010.

Johnson said the average cost of a domestic adoption is roughly $20,000 to $25,000, with intercountry adoptions costing up to $30,000. If the credit isn’t extended, Johnson said those costs would become even more prohibitive for families with big hearts and tight budgets. And while he’s optimistic that a bipartisan compromise can be reached, the uncertainty of what’s to come cannot be good for any potential adoptive parents, he said.

“Something’s going to have to be done,” he said. “These families are committing themselves to these kids right now without any type of confidence that this credit that has been available to them for all of these years will remain. For the sake of these children, we’ve got to get this resolved quickly or we really may see a pretty sad impact on waiting kids.”

Johnson continued: “But we think there’s the political will to do it. We’re optimistic something will be available to families and we’ll get this accomplished in a lame-duck Congress.”

Joe Kroll, executive director of the North American Council on Adoptable Children, cited the case of a Wisconsin couple as an example of just how important it can be to claim adoption expenses as a refund rather than a credit.

Todd and Mary Hankel, of St. Croix Falls, Wis., adopted seven siblings from a troubled Minnesota family in 2006 in order to keep the children together. They were able to carry the tax credit against their expenses until 2010, when the tax break became refundable and they received a check to help them pay off a mortgage for an addition to their home. And like most families who decide to adopt foster children, the Hankels are not wealthy, Kroll said.

“When you look at the numbers, you see that folks under $100,000 make up the bulk of the adoptions,” he told FoxNews.com in September. “It’s stunning how many families at lower income levels are adopting children.”

In a statement to FoxNews.com, Sen. Roy Blunt, R-Mo., said he’s “proud” to support the Making Adoption Affordable Act.

“All adoptive parents know the profound impact that adoption has on their lives and their families,” Blunt’s statement read. “I’m proud to support this bill that expands the Adoption Tax Credit and makes it permanent so that more Americans have this opportunity to add to their families.”