[SadieAnn]

We had a failed placement. Most of the costs were medical expenses paid for Mom. For anyone who has used this credit. Are the medical expenses a "qualifying" expenses?

[romber222]

Hi everyone,

My name's Rob, and my wife and I are starting to go through the domestic adoption process, and I'm having questions about the adoption tax credit. I just got off the phone with the IRS, and they seemed just as confused as I did.

I seem to understand what happens in a failed attempt, but what about expenses in a year before connecting with a birth mother?

We started the adoption process with our attorney in the fall of 2004, and have spent about $5000 on qualified adoption related expenses, but have not yet connected with a potential birth mother.

1). Can we take that amount in a credit on our 2004 return, or do we have to wait until the 2005 return when we (hopefully) will have finalized an adoption?

2). Assuming the worst, and in 2005 we spend all our resources to adopt, but we aren't able to join up with a birth mother, can we take the full credit on our 2005 taxes? The form seems to require the child's name and Identification number.

Thanks for listening, and good luck to everyone.

Rob Amberson

[claschober]

We just met w/ our tax guy last week and asked him to look up the information about the tax credit since we had a failed placement in 2004. He told us we can claim lawyer fees and such the year after we paid them. So we will claim them in our 2005 taxes even though they were from 2004.

Hope that helps!

Cindy

[2nd time round]

Can someone tell me if you can get a tax credit for a failed adoption in Guatemala? The final decree was signed. We got a refund for most of the fees, but are now trying again. CAn we claim it for last year or do we have to next year. very confused!!!

[SadieAnn]

Go to www.irs.gov and look up Publication 968 "Tax Benefits for Adoption", there is one specifically for use in preparing 2004 returns.

Naturally there are still points that are confusing, but I found it quite helpful.

In domestic adoption you can the credit for a failed placement (which we had). As I understand it (disclaimer that I am a not tax expert HA!) you cannot exceed, per each adoption effort, the total amount of the credit which is $10,390. So if you spent $10,000 on a failed match, and then later you spent another $10,000 on a match that leads to a successful adoption, you could only claim $390 of the last $10,000 you paid out.

The publication has a table that outlines the year you can claim the expense vs the year you paid it.

For our failed placement we have filed form W-7 to obtain a temporary tax ID # (whether or not we get it is yet to be seen). However, Pub 968 does provide some direction if you have "no identifying number". I have not followed up on that yet but plan to investigate it.

I believe the year you claim and expense does depend on whether or not the adoption becomes final.

Also if you have any employer benefit for adoption that needs to be factored in.

Good luck to all!

[kinnj]

To add some more confusion to the adoption tax credit issue...
I called IRS yesterday because we had failed placement in 2003, and the publication says you cannot take the credit till the year after the payout. So therefore, we can take the credit this year. In addition, we had a sucessful adoption in 2004. We cannot take credit for this adoption till 2005 return. The lady at the irs said that I can deduct whatever I paid in 2003 on the 2004 form as long as it doesn't exceed 10,390 and I can deduct another 10, 390 in 2005 on my 2004 form. I have heard both senarios that you can and cannot take 2 deductions for 2 seperate attempts. I wrote her name and id number down, so that if I am audited, I have some documentation that she said this.
I know this does't help, but maybe someone can clear up this issue.
It is a shame to have such a great benefit that noone knows how to use.
KINNJ

[lashicks]

We adopted internationally this year (2005). The adoption was finalized abroad and the child became a U.S. citizen the moment we landed in the states. We received the child's certificate of citizenship and a social security card. Another couple in the United States is in the process of adopting him (from us) domestically.

Do we qualify for the tax credit, or is there a certain amount of time he had to live with us before we are able to claim the $10K against our expenses? ($30,000+)

[chrismwj]

We had a failed international adoption. Do we qualify for the tax credit too?
Thanks,
Chris

[lashicks]

yes, we DID get the full tax credit for our adoption last year.

Please note: We FINALIZED this adoption from Taiwan, so the child was a citizen upon landing at LAX. Therefore, the adoption was completed. I didn't realize that a "disrupted" adoption is one which is not finalized, and that a "dissolved" adoption is one which is finalized and then broken (parental rights terminated to allow another family to adopt the child).

The boy we adopted from Taiwan last September just turned 5 and lives with his new legal parents in Florida. He is thrilled, they are thrilled, happy endings all around. We learned that our experience does not preclude us from adopting again. If anything, we are considered excellent candidates since we now know what we can and cannot handle/provide as a family ie: adopting out of birth order is no longer an option for us.

Good luck to everyone on your journeys.

[cookeville3463]

Hi,
We used a TN adoption agency to try and adopt an infant from Guatemala, its been about 19 months now and the adoption appears to be going no where (I want bore you with the details). So far we've invested about $30K, $20K of our own money and about $10.5K we borrowed against our house. Our total income is about $52K a year and except for the adoption loan our house is paid off, so we don't have much to deduct. The agency want even talk about giving us even a partial refund and our attorney (who recommended the agency) now says it would cost more to go to court than we could get back. So all that said is there any way we can get a tax credit or deduction for the failed International adoption? Thank you. cookeville3463@yahoo.com

[ContactChar]

From the IRS website, instructions for Form 8839:

Part I—Information About Your Eligible Child or Children Line 1

Complete all columns that apply to the eligible child you adopted or tried to adopt. If you do not give correct or complete information, your credit and any exclusion may be disallowed.
If you cannot give complete information about an eligible child you tried to adopt in 2004 because the adoption was either unsuccessful or was not final by the end of 2005, complete the entries you can on line 1. Enter “See Page 2” in the columns for which you do not have the information. Then, on the bottom of page 2, enter the name and address of any agency or agent (such as an attorney) that assisted in the attempted adoption.

Child 1 or Child 2

If you made more than one attempt to adopt one eligible child, combine the amounts you spent and complete only the “Child 1” line. Do not report the additional attempt(s) on the “Child 2” line. Complete the “Child 2” line only if you adopted or tried to adopt two eligible children.
Example.
You planned to adopt one child. You had one unsuccessful attempt to adopt a child and later successfully adopted a different child. Complete only the “Child 1” line because you made more than one attempt to adopt one eligible child.

So it sounds to me like failures get folded into the credit for a successful adoption.

[JenB1108]

I would love more information on this. We recently signed a match letter through our facilitator in CA. A few days later, she discovered that the birthmother had lied about several things on her ppw and that she was considering talking to other agencies. Unfortunately, the match was terminated as the facilitator refused to work with her further and recommended we do the same. Would the tax credit apply to this failed adoption? I wouldn't be so concerned with being able to claim this one and then another one down the road. I'd be happy with claiming my expenses incurred in 2005 and the remainder, up to the limit, once we've finally have our child. Thank you for your help.

[sanclemente]

We started adoption proceedings for a domestic adoption in 2003. At that time we incurred expenses for the adoption facilitator, attorney, and home study, etc..

unfortunately the baby we adopted in 2003 was reclaimed and we had the same occur this past year.

We were under the impression we could not get a tax credit for either of these situations.

Can someone tell me if we can actually file for a credit on our 2006 taxes for the expenses paid in 2003? Also because in both situations the babies were reclaimed after a week we never obtained a SS#. In that situation what do you do on the tax forms?

Thank you for your assistance.

Julio

PS Shame on people who say that you're trying to "work" the system. they have no idea how it feels to have a child taken from you, after you have tried so hard to have a family.

[usmcfamily2005]

I do not understand why anyone would get offensive or abusive because someone else claimed and adoption tax credit for a failed adoption. It is perfectly legal. I did not have a failed adoption however did do research on the tax credit before we even adopted.

For those who do not believe it is true. Go to Internal Revenue Service In the search box type adoption. It will bring up the forms, instructions, requirements, etc.

It is definitely not trying to get something for nothing, it is just the government's way of being fair to even the failed adoptions. An adoption expense is an adoption expense.

OH ya, to any of those who thought they could not use the adoption credit because of a failed adoption, you can file an amendment to your tax return for up to three years after the original return was filed. Again go to Internal Revenue Service and Search for amendment or amended tax return

[mom2sam]

We had a situation in 2006 where we were chosen by an emom but it was a private situation. We hired an attorney to contact her attorney and obtain dr records, etc. In doing this we learned she was lying about her drug use and we walked away from this situation. Our attorney fee was about $600 for the 2 days of work he did. Is this considered a failed adoption? Can I claim anything?? I know it's not much $$ in the big scheme of things but every little bit helps when trying to pay for the next attempt. If anyone has any info on this I'd appreciate it.