IRS says file in 2011???

Assuming that your adoption is a domestic one, then the IRS rep you spoke to is wrong. The IRS rules state that you may begin to claim the credit when EITHER of these two apply: 1 - the adoption is finalized 2 - the year AFTER the expense was paid. So claiming your 2009 expenses on your 2010 taxes was correct, for a domestic adoption. When you appeal, I suggest copying their own rules, highlighting the ones you are following, and including it. I also suggest NOT including documentation showing the adoption was finalized in 2011. It is irrelevant to your 2009 expenses, and as you have seen it can easily confuse them.

Thank you! I was just looking for confirmation that I was right. We haven't spoken to anyone yet, but I plan to. This was all by letter.

I believe the IRS is correct in this case. If you had finalized in 2010, you could have claimed the 2009 expenses then. If an adoption is not yet finalized, you have to wait until the year after the expense was paid. Since you didn't finalize until 2011, your 2010 taxes should not include expenses yet. They will all be included on the 2011 tax return (for both 2009 and 2010 expenses).

Grace- Actually the IRS is wrong (and they told me that when I called) You are right in saying you can claim expenses the year after they are paid (whether you have finalized or not). So we claimed 2009 expenses on our 2010 taxes. The expenses from 2010 will be claimed on 2011 taxes.