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I know many threads deal with the adoption tax credit so I apologize if my question is a repeat. We began the adoption process in January of 2010 and were officially approved and waiting by July 2010. We have paid approximately $7500 in fees to our agency thus far. We had hoped that this year, 2011 we might be placed and then would file for the tax credit. It sounds like we've missed the boat though and could have filed for credit for the initial $7500 even though we haven't been placed yet. Is that correct? Two people who I spoke with indicated that we could only claim the credit if we actually got placed which is why we've done nothing with it this year. Any insight would be appreciated!
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The IRS rule for domestic adoptions is that you may begin to claim the adoption tax credit in EITHER
1 - the year the adoption became final
or
2 - the year AFTER the expense was paid.
So if you paid expenses in 2010 for a domestic adoption, then you can claim those expenses against the adoption tax credit when you do your 2011 taxes.
It is important to note that for the federal adoption tax credit the IRS does not care when you are *placed* with a child. They care only when you paid adoption expenses and when the adoption becomes final - nothing else. The *placement* of a child only has to do with claiming that child as a dependent, not with the adoption tax credit. They're two different things.
So, whether you have a finalized adoption in 2011 or not, you can claim the expenses you paid in 2010 on your 2011 taxes.
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