Tax Credit

The adoption tax credit is just that...a credit, not a deduction...it reduced your total tax liability. So, let's say you pay in $15,000 in taxes over the course of the year. The total tax credit is $10,000, so you will receive $10,000 back from the IRS. If you pay less than $10,000 in taxes, you will receive back what you've paid in...and you can roll over the tax credit for up to 5 years until it's used up. Make sense? I would highly recommend having an accountant do your taxes just to help make sure all the i's are dotted and t's are crossed. Good luck!

THANKS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Now this question may be wishful thinking. If we file seperatly, can we claim twice...?

Nice idea, sorry that you can't claim twice. The credit is attached to the adoption - 1 adoption, 1 credit, regardless of how you file. You will need to supply either your child's SSN or apply for an "Adoption Tax ID Number" or ATN for the child. This is how they track the adoption. HTH Regina, AMom to Ryan Joshua Thomas

I did not know about an Adoption Tax Id number? Do I get that from the SS office? BTW, I LOVE these boards. Its amazing how much stuff you learn about!

The IRS has a form you fill out to apply for one if you don't have your child's SSN in time for filing. That's how we learned - from asking others! Glad I can pass the info along. Regina

Go to the [url]www.irs.gov[/url] website and get the forms and instructions for 8839. You will be able to apply for credit for each eligible child whether it was successful or not. You can claim up to $10,000 for each child.($9000 for one, $10,000 for the second) Just make sure you have your supporting documentation. To get the adoption taxpayer number you will need Form W-7A. Like the one of the previous posts stated...make sure you run it by a tax professional.

I dont understand why you have to pay for a failed adoption?

MrsCinderella, some agencies work that way and some don't. Even if an adoption fails, there was always work that was done before that failure. The intake stuff, counseling for the birth family, expenses for the birthmother, paperwork, legal work, matching expenses, etc. The later in the process that the adoption "fails", the more costs mounted up before that time. In 34andhopeful's case, $9,000 of expenses had accumulated before the adoption fell through. Some agencies require payment for individual things they do, leaving the adoptive parents to pay as they go for whatever is needed, with no guarantee of getting a return on their money in that case. If your match fails to result in a placement, you have to pay the associated costs anyway. But if your first match works out and you adopt that child, you've usually paid less money. Other agencies combine all adoptive parents into one "risk group" and share out the costs associated with all adoptions that fall through. No one set of adopting parents ends up paying for the costs associated with a match of theirs that didn't happen, but all waiting adopting parents pay more than the cost of a single adoption that goes through. Hope that explains it for you!

yes it does. thank you. :)