Adoption tax credit

Hi! I don't know much about the expiration of the credit, other than you should write to your congressmen to encourage them to extend it, but I can help with the rest: The federal adoption tax credit is a credit against the taxes that you would normally owe the IRS. You only get money from claiming the credit if the IRS would normally have kept some of your money after you filed your taxes. You fill out the forms and claim the adoption tax credit when you do your taxes for the calendar year in which you adopted. So if you had adopted in, say, 2005, you would have filled out the forms when you did your 2005 taxes - usually April of 2006. Since you are adopting internationally, the adoption must be considered by the USA to be final before you can claim it. It does not matter when you took custody. It does not matter when you assumed financial responsibility. It does not matter when you paid the fees. You will have an adoption decree, with a date on it. If the USA accepts that as the date of the adoption being final, then that's the date that matters. If you have to readopt in the USA, then that's the date that matters. (I'm only 90% sure on this paragraph. If you'd like confirmation on this, ask on the Guatemala adoption forum. There were so many adoptions done there a couple years ago that they know the specific answer to this and can quote you the IRS paragraph if you need it.) International adoptions almost always exceed the amount of the credit, so you will likely qualify for the full amount of the credit: $11,650 (I think that's this year's number, check the IRS site to be sure.) If your family makes more money than around $180,000 per year, then check the IRS site to see when the credit starts getting phased out. You lose it entirely somewhere around $260,000 in income. Hmmmm, I know there's more... Post back and ask your questions, we'll see what we can do with them!

Just a small correction to the answer above. From what we were told we can continue claiming adoption expenses for the next three years after adoption was finalized. We chose to go with "People" to make our lives easier. We were surprised to find that much more of our expenses were qualified for the tax break than what we had believed. Also, the tax break is PER CHILD. If you're adopting multiples, expect a nice amount back. Of course, no tax break can compensate for all the expenses of adoption, so if that's why anyone is considering adoption - probably a bad idea... ;-)