[Robyn7135]

Thanks, Diane. I guess we'll just keep all of this for next year.

[CinB]

Hi we had a failed adoption in 2006 and filed for the tax credit and received it. We then had 2 failed adoptions in 2007, can we file for the tax credit? We will not be trying to adopt in the future. If anyone can help with this that would be great.

[Carlyone]

From everything that I've read so far it seems that you can only claim failed adoption tax credit if it is a domestic adoption. The only time you can claim adoption expenses on an international adoption is when the adoption is complete. This doesn't seem quite fair but if anyone has any other info on this, I would love to receive it. We are looking at a $20k loss for our failed international adoption. Thanks!
-Carly

[seanbeck]

I found the same thing with Turbo Tax. We had two failed adoptions in 2007 and thought we could claim them, but evidently not till 2008. Now when I go back and read the IRS website, I see that it says that in a round-about way (although when I read it before viewing this thread, I thought it said we could claim them this year, so I am obviously not IRS savy!). I was so confused! Thank goodness for this thread and all of your insight!
Becky

[yoyoyo]

Originally Posted by Carlyone

From everything that I've read so far it seems that you can only claim failed adoption tax credit if it is a domestic adoption. The only time you can claim adoption expenses on an international adoption is when the adoption is complete. This doesn't seem quite fair but if anyone has any other info on this, I would love to receive it. We are looking at a $20k loss for our failed international adoption. Thanks!
-Carly

Carly,

We are in the same situation after a failed adoption attempt in Russia. We will not be pursuing another attempt, so we have no chance of getting an adoption finalized.

I've studied the IRS docs and failed international adoptions cannot receive a tax credit (we've spent upwards of $15K) until an adoption is final.

I am writing my senators explaining the unfair difference in tax law between domestic and international adoptions. Maybe if enough people complain the government will correct the issue.

-yoyo

[kato44]

Hello, I too am worried about asking my question. Please understand that it's not about the money, but the money is a concern. My husband and I are hoping to start the adoption process in October. My husband is also starting a new job in Aug and his new company's insurance covers a percentage of in-vitro. We have been doing all the other fertility treatments for two years to no avail. We thought in-vitro was out b/c of the money. Now we are willing to try it once. Because the adoption process takes so long, we are thinking of beginning the process anyway and still attempting in -vitro in October. If we do begin the adoption process and then back out (in the case we get pregnant), are we eligible for the tax credit for what we spent for the home study and whatnot? I'm not saying we wouldn't still be willing to adopt if we got pregnant - in fact, I think we would still go through with it. But, as I said, our financial situation is tough right now. Does anyone know?

Really want to be a mom but money is making it difficult!

[lmitch]

unsure how old this post is..but if you don't pay 10K plus in taxes you don't actually get 10K in cash from the gov folks!! You get a credit for the taxes you paid and the government still ends up taking some anyway. So if you paid in 4000 in federal income tax thats the max you would be able to back from them. But you can roll over the credit over a few years not sure how many as my accountant handles that.

To the poster thinking about ivf and adoption... um NO you don't get to take the credit unless you have an actual adoption or the agony of a failed adoption which I wouldn't wish anyone to ever ever have to go through. Adoption is not for the faint of heart!!!

Beyond that there is a form the 1071 A or something like that so you can file your failed adoption if the birth parents don't willingly give you the ssn.

To the posters who should have taken the exemption but didn't CALL a competent tax advisor promptly to file an amended return.

[ToniToot]

ok, I had a failed adoption due to a scam. I filed for the adoption tax credit and received it. We were awarded restitution when the girl was sent to jail. We never thought we would see a penny since she was such a low life. We found out her history after the fact. We have started to receive checks from her. Does anyone know our obligation to the IRS?

[ZanesDad]

Originally Posted by ToniToot

ok, I had a failed adoption due to a scam. I filed for the adoption tax credit and received it. We were awarded restitution when the girl was sent to jail. We never thought we would see a penny since she was such a low life. We found out her history after the fact. We have started to receive checks from her. Does anyone know our obligation to the IRS?

Theoretically, to the extent you are reimbursed for adoption expenses that were used to qualify for the credit, you may have to pay the tax credit back to the IRS. That's a basic application of the tax-benefit rule.

For example, let's say you had $15,000 of expenses that generated a $10,000 credit. If $5,000 of those expenses are subsequently reimbursed, no problem, as there would still be $10,000 of unreimbursed expenses that still qualify. But if more than $5,000 is reimbursed, then you would have an issue.

I'm not sure how recapturing the credit would be accomplished in this case. Maybe by filing an amended return for the year you originally claimed the credit, maybe by increasing your tax liability for the current year. It all depends on when the credit is utilized. It's a rare enough occurrence that it would be best to consult with a tax preparer.

[ToniToot]

Thanks, I think I will call the accountant tomorrow. So far we have gotten a whole $42.00 and restitution is ordered around 20,000.

[2061n]

Hello, we are in the process of an international adoption and have been waiting 2 years for a referral, I am not hopeful that it will be received before all expires in may. I wondered what your situation was and if our situation would apply if we do not have success by that time.

[DianeS]

Originally Posted by 2061n

Hello, we are in the process of an international adoption and have been waiting 2 years for a referral, I am not hopeful that it will be received before all expires in may. I wondered what your situation was and if our situation would apply if we do not have success by that time.

Since your adoption is an international one, you will not be able to use the adoption tax credit until your adoption is finalized. Unfortunately, this means if you stop pursuing this adoption, and never finalize it, you will not be able to claim your expenses as part of the adoption tax credit, and you won't get any of that money back from your taxes.

[jimbosoko]

We are in need of some guidance.

We paid out about $13,000 this year (2008) to an adoption agency and attorney for the purpose of adopting a child. We were matched in July 2008 with the birthmother's due date of December 9th. On December 1 the match failed, so we are back to hoping for another birthmother. We are sad and disheartened, but we continue on and are hoping for the best.

My question: at this point, can we claim the adoption tax credit for the agency and attorney expenses of this failed match on our 2008 return?

Some have told me that I cannot claim anything, unless I have a successful match...that just does not seem right to me......any help would be greatly appreciated.

Jim & Tracy

[lmitch]

Tracy,
I am certain there is a form that you can submit for a Tax id number for filing. I think it takes about 6 weeks to get it. I can't remember the form number anymore sorry but I am 90 percent sure you can take the deduction. Go to irs.gov and look in forms even type in failed adoption to find it. sorry for your loss
Laura

[DianeS]

Originally Posted by jimbosoko

We paid out about $13,000 this year (2008) to an adoption agency and attorney for the purpose of adopting a child. We were matched in July 2008 with the birthmother's due date of December 9th. On December 1 the match failed, so we are back to hoping for another birthmother. We are sad and disheartened, but we continue on and are hoping for the best.

My question: at this point, can we claim the adoption tax credit for the agency and attorney expenses of this failed match on our 2008 return?

The short answer, jimbosoko, is no. You can not claim those expenses on your 2008 taxes. But you can claim them on your 2009 taxes instead.

The reason is that the IRS rules state that for a domestic adoption, you can claim expenses EITHER in the year the adoption was finalized, OR in the year *after* the expenses were paid.

So if you paid in 2008 for an adoption that finalized in 2008, you can claim those expenses on your taxes in 2008.
But if you paid in 2008 for an adoption that did not get finalized, you can claim those expenses on your taxes in 2009.