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Maybe somebody knows the answer to this one: if one starts the domestic adoption process (expenses paid in 2002) but gives up and switches to international (in 2003, with a different agency, i.e. new application, home study & process fees), can the domestic fees be used toward a Tax Credit for a separate failed/incomplete adoption whether or not one ever returns to the domestic program and completes a domestic adoption?
I know that if a domestic adoption attempt fails and then a 2nd domestic attempt is successful, the IRS treats all those expenses as a single adoption. Probably the same for two attempts at an international adoption that results in one adoption. I just wondered if this might be looked at any differently. We might re-pursue domestic after completing international, but by then we're past the "claim the previous year's expenses" rules for domestic if we don't do it with the 2003 taxes (and our international expenses would be eligible when we file 2004 expenses, God willing).
It'd be great if we could get that $4000 of domestic expenses back in addition to the (eventual) $10,000 toward the international adoption expenses.
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It's not quite that simple. International adoption expenses cannot be claimed until the adoption is final. But you can claim any *domestic* adoption expenses in the year *after* they are incurred for an incomplete adoption (or in the year incurred if the adoption is complete).
I've read the form, the instructions, the related publication *and* the Tax Code, and none of them explain this situation. The instructions and/or publication give examples of a failed domestic adoption followed by a completed one, but nothing as complicated as what I'm asking (and the Tax Code doesn't even say the thing about treating failed adoptions as part of the later completed adoption as far as I can tell).