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In 2002 my wife and I attempted a private adoption. All was nearly final, all lawers were paid, then three days before the due date the mother backed out. The child was born in 2002. Two out of three IRS reps. have told me that I can claim the adoption credit. One of those said on the 2003 taxes and the other said that I could for 2002. My question has three parts....(1) Am I eligible for this tax credit even though the adoption failed? (2) In which year ? (3) And probably the hardest question of all is the tax form itself.....Do I need a child's identifying number? I am unable to track the mother down since she has moved. Even if I were able to get in touch I am certain that she would not give us the required info. Please help.
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Come on now. Are you trying to tell me that your first reply was not sarcastic. What were you feeling when you wrote it. Think about it..........I do understand how forums work. All I want is a reply from someone who appears to know something about what I am discussing not feelings and emotions.
Also.....failed infertility treatments are tax deductible. And this includes IVF! So does your reply really have merit or validity?
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Look, I sincerely was not trying to be sarcastic. Whether you believe me or not is of no concern to me. I'm not going to waste my time responding to your comments, so I will remove myself from this thread.
You seem to have lost track of your original question anyway... and my comment about the legalities of two families using the same child as a tax write off seemed to hit a nerve and will just have to remain unanswered.
You can refer to IRS Publication # 968 (available on [url]www.irs.gov[/url]) for the rules regarding the Adoption Tax Credit. It does state that in order to take the credit, the adoption must be finalized. It also states that you must provide the childs identifying number. Seems like your out of luck on both counts. Although you will not be able to take the credit, you may be able to write off the loss. You will have to check with a CPA on that.
Good luck,
Laura
wdean20
Hi,
I feel your frustration because we were in the same boat. My husband and I had two failed adoptions. One in Dec of 2001 and one in August of 2002. We lost abour $9600.00 in attorney fees, travel, bm living expenses and so on.
I told our accountant and he suggested we claim a casualty loss. He asked for me to bring all of the contracts and receipts with our other tax info and I did. We were able to claim the loss. The downside was that it wasn't dollar for dollar. Of the $9600.00 we were actually able to write off $3300.00 of it. It doesn't sound like much does it?
Anyway, I'm sorry for your failed adoption. I know it's hard on both of you. We are still trying though.
Kim
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I apologize for my remarks to all. No hard feelings please. Again I am SORRY. Thank you for those who have sincerely responded to my question. However.......The title of this thread advertises that (This board has 3 experts). I am still waiting for an answer from the experts. Are the experts the senior members? Please respond. Thank you.
To all those who are concerned with my question and especially Carolina Momma I have found a definate answer. I just got off the phone with the IRS. Spoke in detail of my situation. The answer was that I most definately can take the adoption credit for a failed adoption. All the publications that we went over mentioned "failed" or unsuccessful "adoptions". They mention to enter see page 2 for the information that you are unable to get. Even though the worksheet seems to disclude a failed adoption I was told that was just a worksheet and that I needed to omit that worksheet. The agent pointed out several areas in the publications that proves my case. So Carolina Momma maybe you can look into this and get some sort of adjustment for your 2001 failoed adoption.
Am glad to hear that you have figured this all out. But we dealt with a similiar prob ( well at least in the tax issue)
We adopted our foster child and had claimed her on our taxes as OUR daughter this year, but low and behold "someone" else claimed her.
We were told that we could file our taxes with her on it, but we might not get the tax credit for her...we would have to file an ammendment next year and PROVE that she was our daughter.
I was more than willing to send in the paperwork (adoption cert/birthcert, etc) but they don't want it now...the IRS says that IF they need it, then they will contact us...
So we are still waiting...should get some sort of return end of April....Good luck (and by the way, I NEVER got a "Legal Response" on my thread last month either!)
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Did IRS indicate the "allowable expenses" included birthmom expenses? We also have had a failed adoption. When I read the IRS publications, my understanding is that the tax credit can be taken over a five year time period. Therefore if you have a failed adoption and take the tax credit for it....you will not be able to take a tax credit for a second failed adoption OR for a finalized adoption. Only one tax credit in a 5 year time frame. Did you get that impression as well?
That would depend on your tax situation. You carry forward the unused credit over five years if "your allowable adoption credit for a year" is more than "the total of your regular tax".
Pixie I have read several threads relating to this subject and it is made to be real confusing. However it is really simple. What it comes down to is....Do your taxes without the adoption credit. If your total tax line 61 on form 1040 is $0 dollars or less then you can't take the credit. On the other hand if it is, lets say $500, you can only claim a $500 credit and you would have to claim it next year or up to five years. If your total tax is equal to or greater than your adoption expenses then you can claim up to $10,000.
I hope that I am accurate in my understanding. I apologize ahead of time if I am not. I hope this helped.
I just read your post again and I am not sure if I actually answered your question. So let me ad this. I believe that once an adoption is final it starts a new $10,000 cycle given that it is in a new year. I do not see in the publication where it mentions the 5 year period except for the "Tax Liability Limit" which I explained above. If I am over looking something would you let me know?
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Yes, this is confusing. My question is...do "allowable expenses" include birthmom assistance such as rent, food, utilities, clothes?
I understand the tax credit starts over after a finalized adoption and that you receive the credit for each finalized adoption (such as adopting two children).
What I am not sure of...if you have a failed adoption and take the complete credit....then you have a SECOND failed adoption....can you also take the adoption credit for the second one during the 5 year period.
Example: lost $10,000 on first failed adoption
lost $ 2,000 on second failed adoption
Do you treat these as two separate adoptions and take the tax credit for each....or is it a total tax credit for $10,000 during one five year period?
The publication I read sounded like you only got to take the $10,000 credit one time, no matter how many failed adoptions you had during a five year period.
I hope my question makes sense.
Yes you can claim the adoption tax credit for a failed adoption. You file the same way you would as if the adoption took place...the only difference is needing the information to back it. I believe they ask for the homestudy agency's information and the details to go with it in that sense (attorney's information, etc.). The exact information can be found under IRS tax forms and adoption tax credit. I think it is the goverment's way of giving back to the families that put their heart and soul and bank account into this and come up with nothing. The lost money is definately enough to discourage adoptions let alone the heartache that goes along with it. I do believe it has to be filed the year after the money was paid tho. Don't take to heart the ones that comment but know nothing on this topic...they surely wouldn't walk in and pay $20,000.00 to a car dealer expecting a new car and not getting one. Would they be so eager to leave with nothing more than an upset look on their face?? Or just write it off as a contribution to the car dealer? No, I think NOT!! So why shouldn't we as adoptive parents expect to get our money back if it should fail before given the chance to start? Good luck and best wishes!!