tax credit multiplies for siblings?

I wont tell you I am totally knowlegable in this area, but from what I understand is if your adoption was $20,000, lets say total for the 3 kids, you would only get to deduct that amount. If you are talking 15-20K each child adoption then I would imagine it would be the total amount paid up to the cap. However, if your children fall anywhere within criteria for "special needs", it is different again. Hope someone can be of better help to you.

If you adopt kids classified as special needs, then yes, you get the $10K+ tax credit for EACH child. If you adopt kids NOT classified by the state as special needs, then you get to use the credit on the amount you spent on their adoptions, once the adoptions are finalized.

The three kids are now in Guatemala (International adoption). They are older, between 5 and 13, but I don't know if that qualifies as "special needs". Also, maybe more importantly, the TOTAL "cost" for all the kids is $15,000.-$20,000. Do you believe that the $10,160. tax credit is for each PERSON, enabling us to write off our entire expense, most probably?

USUALLY adoptions occuring in other countries do NOT qualify for the sn classification bc it needs to meet the state's requirements for sn. MOST states have a clause in their classification that states the adoption could not be possible without the adoption subsidy. Bc you are adopting w/out a subsidy, your child wouldn't be classified by your state as sn. Does that make sense? Anyway, I wanted to congratulate you on your impending adoption. It's great that at least their adoption expenses will be covered!

you've got it- it applies *per child* to ALL intercountry adoptions (as well as domestic special needs, I believe)! our first adoption was a sibling group of 2 from India- we can claim the entire credit and so will technically only have paid something like 2000 dollars, if that, in the end. what's cool too is you can take it over 6 years. we don't have a 20,000+ tax liability over one year, but over 6, no problem.

[url]http://www.irs.gov/pub/irs-pdf/p968.pdf[/url] Here's the government website that explains it all. You'll be able to carry the tax credit over the next five years.

I think I understand everything that was said here, but how do you find out if a child is considered special needs in your state? We are planning to adopt Cherokee, possibly a sibling group, and to my understanding Native American are a minority. So, I'm in Missouri, how do I know if they are special needs? Also, we are not spending any money for the adoption, but isn't the special needs adoption tax credit taken even if you do not spend any money, or did I read that incorrectly? My social worker does not know the answer, but promised to look into it and let me know what she finds out. Would an attorney in my state or tax specialist know? Any info you have would be great, thanks!

With domestic special needs adoptions, you can take the full $10,000 credit per child, even if you do not incur $10,000 per child in qualifying adoption expenses. You can also exclude from taxable income the full amount of any employer adoption benefits paid through a qualifying adoption assistance program, up to $10,000. These provisions were put into the adoption tax credit law because the legislators wanted to encourage the adoption of children from state foster care programs. This was a major flaw in the original law, which provided for a $5,000 tax credit. When the original $5,000 tax credit bill was in effect, it did not include this provision, it favored people adopting internationally or seeking healthy infants domestically. These people could take the full tax credit, because most international adoptions and most private and agency adoptions involved more than $5,000 in qualifying expenses. People adopting from state foster care programs usually had few if any qualifying expenses, and couldn't take advantage of the tax credit, even though some of the children they adopted would require years of medical and psychiatric treatment, adaptive equipment, home and vehicle modifications to accommodate wheelchairs and such, and so on. Sharon

First off, the tax credit for international adoption is the same as for domestic, non-special needs adoption -- that is, up to $10,000 per child. (It's actually a little more than $10,000, because the amount is increased a each year, based on the rate of inflation.) Whether you can take the full credit per child depends on two variables -- your modified adjusted gross income, as reported on your 1040, and the amount of "qualifying adoption expenses" you had, per child. With regard to your modified, adjusted gross income, it must be under $150,000 (approximately -- there are adjustments for inflation) for you to take the full tax credit. Between $150,000 and $190,000, you will be able to take partial credit. And if your modified adjusted gross income is $190,000 or more, you will not be able to take the tax credit at all. Also, with international adoptions, you can take the full tax credit for a child ONLY if you had at least $10,000 in qualifying adoption expenses for that child. In other words, if you were adopting three children in a given year, you would have to have $30,000 in qualifying adoption expenses to take a $30,000 tax credit. If you had only $20,000 in qualifying adoption expenses for the three children, your tax credit would be only $20,000. With international adoptions, the IRS says that you may not take the tax credit until the adoption is considered full and final, according to USCIS criteria. If your child comes home on an IR-3 visa, you may take the credit in the year that the foreign country issued a final decree of adoption, unless your state requires readoption. If your child comes home on an IR-4 visa, you may take the credit in the year you readopt or obtain a "recognition" of your child's adoption, if your state allows such a procedure. And again, remember that we are talking about a tax credit, not a refund. A tax credit simply reduces your total tax liability. Here are some examples. I'm purposely oversimplifying a little; for details, talk to your tax advisor, run your tax software, or read IRS Tax Topic 607 and the instructions to Form 8839. 1. On your 1040, you have a total tax liability of $10,000. During the year, you had $10,000 withheld from your paychecks for federal taxes. If you had not adopted, you would not owe anything on April 15, and you would not get any refund, because your total tax liability and your withholding are the same. However, because you finalized an adoption and qualified for the full $10,000 tax credit, your total tax liability was reduced to zero ($10,000-$10,000). Since $10,000 had been withheld from your paychecks, you actually overpaid the government, and the full $10,000 would be refunded to you. 2. On your 1040, you have a total tax liability of $12,000. During the year, you had $10,000 withheld from your paychecks. If you had not adopted, you would owe the government the remaining $2,000 on Apriil 15. However, because you finalized an adoption and qualified for the full $10,000 credit, your total tax liability was reduced to $2,000 ($12,000-$10,000). Since $10,000 was withheld from your paychecks, you actually overpaid the government $8,000, which will be refunded to you. 3. On your 1040, you have a total tax liability of $10,000. During the year, you had nothing withheld from your paychecks. If you had not adopted, you would owe the government $10,000 on April 15 (plus a penalty for underwithholding). Because you finalized an adoption, however, your total tax liability was reduced to zero. Since you had nothing withheld from your paychecks, you and the government are "even". You don't owe anything, and won't get a refund. 4. On your 1040, you have a total tax liability of $12,000. During the year, you had nothing withheld from your paychecks. If you had not adopted, you would owe the government $12,000 on April 15, plus a penalty for underwithholding. Because you finalized an adoption, however, your total tax liability was reduced to $2,000. Since you had nothing withheld from your paychecks, you would owe the government $2,000. 5. On your 1040, you have a total tax liability of $6,000. You had $6,000 withheld from your paychecks. If you had not adopted, you would not owe any money, and you would not receive any refund. Because you finalized an adoption, however, your total tax liability was reduced to zero. Since you had $6,000 withheld from your paychecks, you overpaid the government, and the $6,000 will be refunded to you. IN ADDITION, because you used only $6,000 of your credit, you can use the remaining $4,000 the following year, to reduce your total tax liability. I hope this is helpful. Sharon