tax credit carryover???

January 13, 2004

Let's say my total federal tax bill for the year we finalize our adoption is $8000, and I have paid in $9000 in federal withholding. If I apply the $10,000 tax credit will I receive an $11,000 tax refund? Or do I have to apply the remainder of the tax credit the following year?

The above is totally hypothetical. I'm just trying to understand.

qs mom

January 13, 2004

I've been told you will only receive what you paid in withholding back and you will carry over the difference.

I finalized in July. So, next month when I have my taxes done, I'll have to see what happens.

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tobeafamily

January 13, 2004

Asssuming you did have at least $10,000 in qualifying adoption expenses, you would get a a total of $9000 back, with $2000 of your remaining credit carrying to the next filing year. Here's how it works:

$8000 - tax you owe, credited 100% with qual adoption expenses

+ $1000 - overpayment

= $9000 total refund

$2000 credit carries to next filing year.

Man, this is like one of those math word problems I hated in school :-)

Regina, AMom to Ryan Joshua Thomas

DianeS

January 13, 2004

I agre with tobeafamily.

To put it another way:

You'd get $1,000 back anyway, adoption or no adoption. So you still get that back.

That leaves $8,000 that you would normally owe if you hadn't adopted. If you have at least that much in qualifying adoption expenses, you'll get all of it back.

Whatever else you have left over after subtracting $8,000 from your qualifying expenses is what you can carry over to next year. Many/most people have the complete $10,000 in qualifying expenses, so if that's the case in your example, $2,000 could be carried over to next year.

Hope that helps!