[KarenInCa]

Pikea, I think the tax credit is getting lost in translation.

Most people have a tax liability during the year (the amount you pay to the feds monthly via paychecks). It's very rare that someone would have paid nothing in taxes on their monthly paychecks and still owe nothing at the end of the year. Unless you can prove that you have zero income at all ($0-$15,650 for a married couple, has a tax liability of 10% of their Gross earnings) or unless all of your income is tax exempt, there will be tax liability, which is different than OWING something at the end of the year. Many people overpay taxes during the year so that they don't owe in April. Is that your situation?
In other words, owing taxes at the end of the year is different than what your tax liability would be.

Let's suppose that thru the year, my husband and I pay out $400 a month from our paycheck. That's $4,800 we've paid throughout the year to the feds (400 X 12). At the end of the year, our tax liability (the amount we would be obligated to have paid thru the year) is $3,000. That would mean normally we would be getting $1,800 back from the feds in April ....with me so far?

Now, with the adoption tax credit, we would be getting that $1,800 back (normally), as well as the $3,000 that the feds said we would normally be liable for that year.

Then, the remainder of the $10,000 ($7,000) more, would be banked for the tax liability for the following year, and the following year, up to 5 years till it's exhausted.

At that rate, if life did not change, you could even make yourself exempt on W2s so that you pay nothing monthly for a couple of years, because you would KNOW you would be getting back more than your liability.
Make more sense?