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OK, so we finalized the adoption of our Son this past summer. :prop: We had expenses in 2009 and 2010 only, so no past Adoption Credit filings.
We paid ~$20,000 in qualified expenses over 2009 and 2010.
I received $4,500 in employer benefits after the adoption was finalized.
Note: Numbers are rounded but close to accurate
From the IRS instructions for From 8839 ([url]http://www.irs.gov/pub/irs-pdf/i8839.pdf[/url]) page 2 under Employer-Provided Adoption Benefits there is an example:
"Example 3. Jason Smith paid $30,000 in qualified adoption expenses to adopt an eligible foreign child, and the adoption became final in 2010. Under a qualified adoption assistance program, Jasons employer reimbursed him for $13,170 of those expenses. Jason may exclude the $13,170 from his income. The remaining $16,830 of Qualified adoption expenses are reasonable and necessary expenses ($30,000 - $13,170) continue to be qualified adoption expenses that are eligible for the credit. However, JasonҒs credit is dollar-limited to $13,170. The remaining Qualified adoption expenses include: $3,660 ($30,000 - $13,170 - $13,170) may never be claimed as a credit or excluded from gross income."
From this I would conclude that my $4,500 of employer benefit is excluded from income (less than the max of $13,170). My qualified expenses for the credit are now $15,500 ($20,000 - $4,500). My, like our example Jason, credit is "dollar-limited" to $13,170.
So then why is HR Block SW reducing my credit by the amount of my employer benefits?
Their form (when showing mini-forms) even has this note
"Note: The amount on line 14 is reduced by the amount of any employer-provided adoption benefits excluded on line 26 in Part III below
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Any one know if I used the SW wrong (entered a wrong entry in a questionnaire or something)? Or is HR Block SW wrong?
I contacted HR Block, they suggested I use their Tax Professional Question ($19 or so cost to me) or go in and have one of their Offices do my return ($$$). I informed them I wasn't going to pay to fix their SW (assuming I am right here). Alternatively the CS rep suggested I use the Free Second Look (thru March 31st) to get it looked at. I'll probably try the Second Look, but I wanted to see if others are seeing the same problem and possibly get a warning out there.
Thanks!
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Ran a quick check using TurboTax's Free web version. Entered only my W2 information (for the employer adoption benefit information) and the associated questionnaire for the Adoption Credit.
TurboTax's version of Form 8839 shows (correctly) that I should receive the full $13,170 credit as well as the $4,500 from my employer being excluded from income for tax purposes.
Seems like I will be writing a letter to HR Block as well as attempting the HR Block Free Second Look in an attempt to bring this to their attention.
I will also try to do a second check on HR's SW, by doing a quick entry of just my W2 and the Adoption Credit questionnaire.
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Well well. I open up HR Block to start a quick check return and there is a Federal update waiting.
Download update, install update, open existing return.
Surprise, surprise! Adoption credit is now showing as the full $13,170 credit. And that odd note is gone.
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While I am happy this got updated, the processes with HR Block was very poor. While it might not have been my call that got this fixed, their system has my email (CS rep took it at the beginning of the call) and should know my complaint and it would have been nice to receive an email informing me of the update. They will still be getting a letter from me regarding this, but at least the issue is fixed and other adoptive families can make sure to recoup their expenses and start savings for that next blessing.