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I am in the process of adopting my niece, which should be final in Dec 2012. We are going through Children and Youth Services because that is who she was placed with at the age of 3 weeks old. Can someone tell me if we have the right to claim the adoption credit for 2012 because so far everything that I have paid out of my pocket for the adoption expenses would be reimbursed back to us by Children and Youth because she qualify's as a Special Needs child. We were told we would be reimbursed up to 2,000 for qualifying cost. I'm just wondering if we don't go over the 2,000 cost, does that mean we can't claim the Adoption credit even though she is a special needs child. I hope you understand what I am asking because I tend to carry on my questions :( Any advice would be greatly appreciated it.:thanks:
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I'll answer this under the assumption that she does qualify as a Special Needs child by the IRS's definition. If you finalize in 2012, you can claim the *entire* federal adoption tax credit, regardless of how much you have in expenses. Even if you have nothing in expenses. Because she is a Special Needs child, you qualify for the whole thing. Do not tally your expenses on the sheet for the federal adoption tax credit - just check the box saying she is a Special Needs child. Then follow the rest of the instructions. You also get to claim whatever your state will reimburse you for - so do keep receipts and keep a tally for them. Now for a caution - do whatever you can to ensure that finalization happens this December! The federal adoption tax credit goes down quite a bit in 2013. There are bills in Congress intended to expand and extend it, but there's never a guarantee they'll pass. Hope that helps!
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As far as the IRS definition of Special needs, I would think she would fall under the medical part of it. She has Hep C, got it from her mother at birth. If someone disagrees please let me no because I just learned of this tax credit a few weeks ago and have done some research on it, so I could be wrong about the medical part of it. I have all receipts of what I paid out of pocket , but like I said so far the County Children and Youth said they will reimburse me everything. Im not sure what you mean as far as the state reimbursement. My lawyer contacted me the other day and said the adoptiong possiably could be the first week in January and I was like WHAT..... So I called the court house and spoke to the judges secretary that does the adoptions and explained my situation and she was very nice about it and said she would do eveything she could to get this finilized in December. Thank you for replying. Also, I did read that I would have to attach the adoption decree and also a copy of her adoption assistance certificate or papework to my taxes. Is there anything else I will need that you know of?
I looked up the IRS special needs child quilifactions: 1. The child is a United States citizen or resident; 2. A state determines that the child cannot or should not be returned to his or her parent's home, and; 3. A state determines that the child probably will not be adopted unless assistance is provided.She is a US citizen and she was placed by the County with my husband and I when she was 3 weeks old (she is 2 years old now) because of my sister's bad habits, which she is in jail now, for at least the next 15 to 24 months. My sister and the father both volintarly TPR. The both new they couldn't take care of a child and both parents live with there parents and can't take care of themselves. Now we do have an open adoption only if my sister comes out of jail and stays drug free and this is stated in the open adoption. And as far as rule number 3 children and youth approved her monthly subsidy and her medical card until she turns 18. Do you think she falls under the Irs Special needs catagory?
Hi Myredhead, my husband and I adopted a special needs child last February. I have done ALOT of IRS research on the Adoption Tax Credit in fear of being audited because when we adopted we changed our childs whole name and Social Security #. According to the IRS in order to PROVE that your adoptive child is in fact a special needs child during the adoption process your county case worker should ask you about a Subsidy (monthly payments made to you from the State to care for the child till they reach 18). We had to have our child evaluated by the pediatrician and the pediatrician had to write a special needs rank (1 being minor to 5 being severe). They look at the life long factors of the childs disability. The adoption tax credit is nonrefundable and only reduces your tax liablity. Your taxes can not be filed electronically (paper submitted only), form 8839 has to be completed, and at this time the IRS is not accepted them till late February/early March. Hope this helps, good luck, and God bless
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