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Originally Posted By ChrisMy wife and I are slated to complete the adoption of a boy this fall through an International adoption. Now that the Federal Tax Credit is $10,000 we anticipate that the credit will more than cover our entire federal tax liability. As I have already paid in 5 months of taxes, I would like to complete a new W-4 so that there is no additional federal withholding (I would rather not have the money deducted now, only to have to wait until next year to get it refunded back). Can I adjust my W-4 somehow to reduce my withhoding to zero? If so, does anyone know how as I apparently cannot claim "EXEMPT" as I did have a tax liability last year? Secondly, for tax purposes at what stage of the international adoption does the adoption become final? Also, does anyone know the answers to the above questions with regards to the State of Missouri? Thanks so much!!! Chris
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Originally Posted By "no name and a disclaimer"I am NOT an accountant - however I have made estimated tax payments on my income for several years (self-employed). You can be penalized if you underpay your taxes, but if you have good reason to believe you have already paid too much to the government - then I would talk to the personnel department about at least reducing to the legal limit your deductions - you will still have SS, health, etc. ... but I agree "pay no dime before its time" hold on to your money if you can.
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Originally Posted By chieffan9Chris,I DO know that you should be able to work it so that you can have no federal taxes withheld, but I'm not exactly sure how to do it. The only thing I would warn you of, however, is if by some chance your adoption would become final AFTER the end of the year, you would be penalized for UNDERPAYING your income taxes for this year. I guess you probably have a better idea of when the adoption should take place, but just be aware that you risk a penalty if things bog down somewhere and the adoption doesn't happen until after the end of the year.As for when the adoption becomes final, it becomes final the moment the foreign judge says it is. Which is usually during your court visit in the foreign country. As soon as the judge says that that child is yours, signs the papers, and lets you walk out of there with the child, it's final. Same applies for Missouri. Be thankful you live in Missouri!! Wow! Another $10,000 credit to go along with the Federal $10,000 credit is fantastic and by far the largest one in the country. Notice that some states don't even have an adoption credit, and most of the ones that do, only have them for between $1,000 and $2,000. We are lucky!
Originally Posted By chieffan9Chris,I DO know that you should be able to work it so that you can have no federal taxes withheld, but I'm not exactly sure how to do it. The only thing I would warn you of, however, is if by some chance your adoption would become final AFTER the end of the year, you would be penalized for UNDERPAYING your income taxes for this year. I guess you probably have a better idea of when the adoption should take place, but just be aware that you risk a penalty if things bog down somewhere and the adoption doesn't happen until after the end of the year.As for when the adoption becomes final, it becomes final the moment the foreign judge says it is. Which is usually during your court visit in the foreign country. As soon as the judge says that that child is yours, signs the papers, and lets you walk out of there with the child, it's final. Same applies for Missouri. Be thankful you live in Missouri!! Wow! Another $10,000 credit to go along with the Federal $10,000 credit is fantastic and by far the largest one in the country. Notice that some states don't even have an adoption credit, and most of the ones that do, only have them for between $1,000 and $2,000. We are lucky!