Tax credit for adoption from foster care?
Hi. We have adopted twice internationally and once domestically, thru an agency, so we are quite familiar with the adoption tax credit.

However, I'm not really sure how it works with an adoption thru foster care. It seems like I have read somewhere that if you adopt a child from the foster care system, you are entitled to the full amount of the tax credit even though you actually don't pay much, if anything, toward the adoption. Is this correct? Maybe I'm imagining things!
i believe it is right. Smile it may only be for children that are considered special needs or hard to place. but that is why i use a tax man who can figure that all our for me. Smile
some light reading : [url=http://www.irs.gov/instructions/i8839/ch01.html]Instructions for Form 8839 (2009)[/url]

near the bottom of this page it says this:


If you adopt a child with special needs you can claim $12,150 (minus any qualified adoption expenses claimed for the same child in a prior year) in the year the adoption becomes final even if you did not have any qualified adoption expenses. See the instructions for line 1, column (d), on page 3 for more information.

so yes.....it looks like the irs says the child must be a special needs child to qualify. to see what the irs considers special needs read here: [url=http://www.irs.gov/instructions/i8839/ch02.html#d0e440]Instructions for Form 8839 (2009)[/url]

again....i use a tax guy for this to make sure that i am doing that right thing.
If the child you adopt from foster care in the USA is designated a "special needs" child by the IRS definition, then the parent qualifies to claim the entire adoption tax credit nop matter how much money was spent on the adoption.

So on the 8839 form, you mark a checkbox that says the child qualifies as special needs according to the IRS, then fill in the whole amount of the tax credit where it asks you how much you spent.
Thanks! This is just the info I needed!
The IRS definition leaves it up to the individual states to determine what children are "special needs". Basically, if the child is eligible for adoption assistance from their state, then they meet the IRS definition for "special needs" and you can take the entire credit. You can check with your state guidelines to see what qualifies a child for adoption assistance. It varies considerably from state to state. Some states (i.e. California) classify virtually all children adopted from foster care as "special needs", whereas others have restrictions based on age, race, or emotional and/or physical disability.
Longing2bMom said...
The IRS definition leaves it up to the individual states to determine what children are "special needs". Basically, if the child is eligible for adoption assistance from their state, then they meet the IRS definition for "special needs" and you can take the entire credit. You can check with your state guidelines to see what qualifies a child for adoption assistance. It varies considerably from state to state. Some states (i.e. California) classify virtually all children adopted from foster care as "special needs", whereas others have restrictions based on age, race, or emotional and/or physical disability.


while i always think the best thing to do is ask your tax guy about taxes and your worker about whether the child has special needs or not...here is a little site i like that has some information on each state's definition of special needs: [url=http://www.nacac.org/adoptionsubsidy/stateprofiles.html]NACAC | Adoption Subsidy[/url]

i agree about the california thing....that is why i was not completely clear on the answer....all our fost/adopt kids are californians. Smile
there is really more to it than the NACAC site tells you.. and.. if you have adopted a special needs child. or not special needs. you should have some paperwork from the state showing you eligibility ( or not) I am in Indiana and if I look at the info on this site.. My FS qualifies for assistance. However.. I just got paperwork back last week that says he does not! That becuase of his age. I dont know what other states do. But here they expand on it farther and make you qualify not only as special needs. but hard to place. its crazy!! Im just saying.. you need back up from adoption to show if they are special needs.
What constitutes a failed adoption expense?
I had two children placed with me in 2009 who ultimately went back to their mother. The county had placed them with us as a adoption placement. We spent thousands of dollars on tutoring, clothing, and daycare.

Would this constitute a failed adoption? and are these types of expenses applicable to the tax credit?
sanschu said...
I had two children placed with me in 2009 who ultimately went back to their mother. The county had placed them with us as a adoption placement. We spent thousands of dollars on tutoring, clothing, and daycare.

Would this constitute a failed adoption? and are these types of expenses applicable to the tax credit?


If there was paperwork saying that the children were placed with you as an adoptive family, then yes this counts as a failed adoption.

However, the expenses you listed do not qualify for the adoption tax credit. They are child-rearing expenses, not adoption expenses. Adoption expenses would include the cost of the homestudy, fingerprints, mandatory class fees, things like that.
Help!!!
Hey there!
I hate to even ask you this but not sure really who to contact and thought you might know who I/they can contact to get some help.

When my parents filed their income tax this year they try to claim the new adoption credit that Obama signed into law. They sent all the information that was asked for... got the same letter about "reviewing information and you will hear something by said date" and then a second letter stating another 4 weeks... and they got a letter yesterday from the IRS stating that my parents now OWE the IRS $5000 for over-filing because of them filing for the credit. They are stating they accepted all the adoption paperwork except one and that the one in question was not from an authorized agency... it was Lakeview in Pensacola (FamiliesFirst/DCF) who is the state's foster care program runners. My parents are in their late 60s... the girls that they adopted are biological sisters that were in foster care... the youngest one, who is now 4 years old, was in medical foster care for a seizure condition and both of the girls were born with drugs in their system. According to the bylaws I read for the tax credit (which should have given my parents $24,000) the adopted child must be needy, medically need and/or a sibling group... these girls meet all those. My mother is beside herself worrying... they don't have $5000 to pay the IRS and I am trying to tell her not to flip out and that we need to look into this. They are both retired and aren't rich by any means, they live off of my father's retirement from Armstrong World Industries plant in Pensacola and what they both get from social security. They live in Chumuckla, FL... I am in Covington, LA so I am trying to help them from a distance. They are older and not very computer/technology savvy.

Any help you guys could give or info would be great.

Thanks so much!!!
nolatlg said...
Hey there!
I hate to even ask you this but not sure really who to contact and thought you might know who I/they can contact to get some help.

When my parents filed their income tax this year they try to claim the new adoption credit that Obama signed into law. They sent all the information that was asked for... got the same letter about "reviewing information and you will hear something by said date" and then a second letter stating another 4 weeks... and they got a letter yesterday from the IRS stating that my parents now OWE the IRS $5000 for over-filing because of them filing for the credit. They are stating they accepted all the adoption paperwork except one and that the one in question was not from an authorized agency... it was Lakeview in Pensacola (FamiliesFirst/DCF) who is the state's foster care program runners. My parents are in their late 60s... the girls that they adopted are biological sisters that were in foster care... the youngest one, who is now 4 years old, was in medical foster care for a seizure condition and both of the girls were born with drugs in their system. According to the bylaws I read for the tax credit (which should have given my parents $24,000) the adopted child must be needy, medically need and/or a sibling group... these girls meet all those. My mother is beside herself worrying... they don't have $5000 to pay the IRS and I am trying to tell her not to flip out and that we need to look into this. They are both retired and aren't rich by any means, they live off of my father's retirement from Armstrong World Industries plant in Pensacola and what they both get from social security. They live in Chumuckla, FL... I am in Covington, LA so I am trying to help them from a distance. They are older and not very computer/technology savvy.

Any help you guys could give or info would be great.

Thanks so much!!!


There are MANY people in this situation right now. Do a search for the subject, and you'll find people who have already solved this problem, and others in the middle of it. You'll find what you need there. Hang in there!
nolatag- The IRS has been making some mistakes regarding the adoption tax credit. What you are describing has happened to others. Contact NACAC. They have been helping adoptive families with these issues.
this has happened to a few other people...in addition to calling the IRS....they may want to look into calling a tax advocate.
I'm assuming this was classified as a "high risk foster-adopt" correct? It is only deemed an "adoptive" placement if TPR has already occurred. In this case, no. You wouldn't qualify - sorry to hear that happened though. It's always hard to go through that Unhappy
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