Diane - Thank you for the VERY thorough explanation! I think that really clarifies things. My only question is that I have read that in a domestic adoption, we can claim fees paid toward the same adoption in the year we paid the fees. In other words, since we are paying our adoption fees "monthly" until we reach the grand total for the agency fees, we will have actually paid out about $11,000 before year's end. I was under the impression that something like $11,000 of this could be claimed as adoption expenses for 2008, even if we don't finalize, and that the only situation where we'd need to have a finalized adoption to claim the credit is if it was an international adoption. If this is true, this would just mean that we would put these current 2008 expenses towards our claim for the credit, but if we had any credit left over it would carry forward... ??? right? Is this possible? Or are you certain it needs to be claimed in the year finalized? In our case, once we match, and once we finalize, then we pay the agency two more fees... of about $5,000 total....but since they would be a part of the same adoption, then I don't think we'd have any credit left to claim...... sorry, I think I'm making this even more confusing.
Thank you for your help!