Tax Credit question

silliestbunny · March 2011

I keep getting conflicting information... I have tried to understand the IRS documents but I am still confused. I keep putting off taxes because I don't want to make a mistake... and our tax person seems to want me to take the lead.

Any experts here???

What if any of the following can we claim on our 2010 taxes?

Background... we had/have the intentions of adoption 2 children (though I dream of three!). Here's our story from 2010.

Baby A- Matched and born in July 2010. Match failed at birth

Baby B- Matched and born in Oct 2010. Match failed at birth

Baby C- Matched. Due in Nov 2010. Match failed in early October.

Baby MJ- Matched and placed with us (thank God!) in Dec 2010.

I understand we have to wait for MJ's adoption to finalize to claim her (right)... but what about the three failed adoptions. Can we claim any?

Floridamom224 · March 2011

I believe you can claim only the adoption after is has been finalized. I dont think you can claim anything about the failed matches, but maybe some of yor expenses? Not sure on that part, maybe someone will chime in!

Temp206787500007404 · March 2011

I'm not sure...there's some difference between failed matches and placements. I would talk to a tax attorney or CPA for clarification. We were able to claim legal fees and travel expenses for our failed placement.

kiyote72 · March 2011

here are my deets - may help you:

I had 1 failed DOMESTIC adoption in 2010 - per what i have found on it...and turbo tax software - - can not submit those expenses until the 2011 tax year.

hope that helps.

you can submit on failed DOMESTIC adoptions but not international ones. i bet you will not be able to submit anything until 2011 and you will need a bit of info on each failed adoption. pm me and i can send you the info i found on that topic. they may roll the failed and successful attempt into 1 attempt for you from what i can tell since they occurred in the same year.

silliestbunny · March 2011

Argh... still confused. Doesn't this sound like you can file even if it is not final?

Read this:

On page 5 of IRS Notice 2010-66, under 2(b), "Domestic adoptions that are NOT
final", the proof required includes one or more of the following:

(1) An adoption taxpayer identification number, obtained by the taxpayer for
the child, included on the taxpayer's income tax return (instead of attaching a
document);

(2) A home study completed by an authorized placement agency;

(3) A placement agreement with an authorized placement agency;

(4) A document signed by a hospital official authorizing the release of a
newborn child from the hospital to the taxpayer for legal adoption;

(5) A court document ordering or approving the placement of a child with the
taxpayer for legal adoption; OR

(6) An original affidavit or notarized statement signed under penalties of
perjury from an adoption attorney, government official, or other person, stating
that the signor:

.....A. Placed or is placing a child with the taxpayer for legal adoption; OR

.....B. Is facilitating the adoption process for the taxpayer in an official
capacity, summarizing the facilitation.

On page 6 of IRS Notice 2010-66, under 2(d), "An order or decree must include
information that establishes that the taxpayer's adoption of the eligible child
has been finalized and the date finalized."

It would also be useful to read the Draft Instructions for Form 8839, the form
on which you would claim the adoption tax credit, available here:
https://www.irs.gov/pub/irs-dft/i8839--dft.pdf, or to consult your tax
accountant.

PrincessShay80 · March 2011

We just did our taxes, not sure about failed matches, as we did not have situation but the adoption credit in the year that your adoption was finalized, so if you finalize this year you will get the credit when you do your taxes for 2011 next year. You may still be able to claim LO as a dependant, we claimed DD for 2010- there is a credit and a deduction for children dependants. But the adoption credit it totally seperate.

baber926 · March 2011

We were told by my husband's aunt who owns a tax preparing place that we can claim up to the max for each failed adoption with proof from the agency/law firm. We could not claim partial as our matched baby has not yet been born, let alone finalized. The adoption has to be finalized to claim, so next year we will be claiming expenses from 2010 and 2011.

amm78 · March 2011

Everything that I've read and heard says that you can claim adoption expenses on the year following the year you paid them unless the adoption finalizes in the year you paid them. So, if you paid adoption expenses in 2009, you can claim them on your 2010 taxes which are due in April 2011. If you paid the adoption expenses in 2010, then they are claimed on your 2011 taxes, which are due April 2012, unless you finalize in 2010 (which you did not). I am unsure about your failed matches... but, for the child that was placed with you, if you paid adoption expenses in 2009, you can claim those expenses now. But, if you paid your expenses in 2010, you have to wait until next year's taxes.

amm78 · March 2011

Also, I think if you paid agency expenses that rolled over after each failed match, I wouldn't think you could claim those expenses multiple times for each failed match, since you didn't pay the agency expenses for each match. I am not sure if that pertains to you, though.

jehnm · March 2011

I talked to a CPA about our failed adoption after we had already filed 2010 taxes. He said they expenses had to be paid in 2010 and we could file an addendum for our failed domestic adoption. He plans to do this for us after his regular busy tax season is over. I would love to have that money back to put into our adoption fund. I'll post again when it's complete in case others need that info!

starbuck71 · March 2011

I have the same questions and have heard different answers from different CPAs. Why must it be so confusing that even the professiionals do not know? The most common response I have heard is that you can roll the failed expenses in with the successful adoption, which does me and most people absolutely no good since the expenses of my successful match far exceed the credit. Why bother? If you get a definitive answer would you mind sending ne a PM?

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