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We've spent around $11,500 so far and expect to spend another 5-7,000 more in agency/legal fees after placement. I'm confused about whether we need to file for the credit with our taxes now or wait until next tax season. Any tips? Baby is due April 28th. THANKS!
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You have two options for the first year you can claim the Federal Adoption Tax Credit, and you choose whichever comes first. 1 - You file in the tax year that the adoption is finalized. OR 2 - You file in the tax year AFTER you spent the money. So if you finalize the adoption in 2014 like you're expecting, then on your 2014 taxes you will claim the entire amount you spent. No problem, easy to understand. But if something happens and the adoption is not finalized in 2014, then it gets complicated. On your 2014 taxes you file for the amount of money you spent in 2013. And then on your 2015 taxes you file for the amount of money you spent in 2014. And so on until you either run out of credit, run out of years you can roll it over, or finally finalize the adoption. Hoping you finalize in 2014 so you can do the easier tax option!