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Question:
My wife and I adopted a child from China in August 2003, and we only needed to utilize about $2600 of the max. $10,160 tax credit on our Year 2003 federal tax return because of our combined, low annual salaries and tax liabilities. We've been informed that we can continue to apply the unused credit for up to 4 more years, which may be the number of years necessary for us to fully utilize the balance of this tax credit.
We adopted a second child from China in September, 2004, and we are wondering if we have to claim her this year as an adopted child for the adoption tax credit, since the tax benefit from her would not help our tax liability situation, probably for the next few years. Can we delay claiming the adoption tax credit for her or is there another approach for us to better utilize the tax credit opportunity.
Thanks for your help, advice & suggestions!
You have five tax years to claim the credit from the time of finalization...so to answer your question, no.
What will happen is in 07 you will claim your first daughter for the final time, and in 08 and 09, you can claim your second daughter...in 10, you will no longer be eligible.
But, contact your Tax Advisor for full details on your options...both now and in the future.
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