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DH & I have paid out roughly $7000 in 2011 for beginning the process of a domestic, newborn adoption.
We have yet to find a potential situation..
From what I understand, we could claim that $7000, but what if we *never* go through with an adoption?
Would we owe the money back for that tax credit?
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The IRS rules for the adoption tax credit state that for a domestic adoption you can take the the credit EITHER
1 - In the year the adoption becomes final
-or-
2 - The year *after* the expense was paid.
So your 2011 expenses may be claimed on your 2012 taxes. It doesn't matter to them whether you later have a finalized adoption or not. (So no, you won't have to return any money.)
But - the adoption tax credit is changing drastically for the 2012 tax year. Do yourself a favor and write to your congresspeople and urge them to permanently extend the adoption tax credit the way it was in 2010 and 2011.
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DianeS
The IRS rules for the adoption tax credit state that for a domestic adoption you can take the the credit EITHER
1 - In the year the adoption becomes final
-or-
2 - The year *after* the expense was paid.
So your 2011 expenses may be claimed on your 2012 taxes. It doesn't matter to them whether you later have a finalized adoption or not. (So no, you won't have to return any money.)
But - the adoption tax credit is changing drastically for the 2012 tax year. Do yourself a favor and write to your congresspeople and urge them to permanently extend the adoption tax credit the way it was in 2010 and 2011.