[nixe1597]

Hello everybody,

we are very confused. We adopted our baby girl in November 07, the costs were around 15K. Yesterday, my husband went to the Army Tax Support to do his IRA. We filed all the costs for the adoption, but they said that we only get $2000 back!!?? I thought the tax credit for adoption is around 10K. This is why we could afford adoption!! Maybe they do not have a clue how to do it? Did you go to a specialist? Don't you have to claim the adoption seperatly from the other stuff? They did it together. Please help me, we need the money!!! The birthfather contested the adoption yesterday, and now we need more money for the court costs! We are very desperate!

[momagain5]

hi,
im not sure about this.but i would consult someone else.did you only have 2,o00 in adoption expenses?check the irs website,they should have info on the adoption tax credit.

[TerryBP149]

To your specific question -

The Adoption Tax Credit is the lower of $11,390 (2007 limit, adjusted for inflation) or your actual costs. When you get to claim it depends on when the expenses happened, whether the adoption is final, and whether it is a foreign or domestic adoption. Expenses for failed domestic adoptions qualify, but not for failed foreign ones.

The tax credit is subject to limitations. It is nonrefundable, meaning it can't reduce your taxes below zero. You also claim it after certain other tax credits. Any credit that is more than your tax liability can be carried forward for up to 5 years and claimed on your future returns.

Hope this helps.

_______________________________________________

Some references to the tax benefits -

1. The Adoption tax credit is handled on Form 8839, available through irs.gov. The form link:

http://www.irs.gov/pub/irs-pdf/f8839.pdf

The instructions link:

Instructions for Form 8839 (2007)

The credit has a maximum limit, currently $11,390 for 2007. It is a nonrefundable credit, meaning it is further limited to your Federal income tax liability. Any unused amount can be carried over for up to 5 years and used against your taxes in those future years.

How and when you claim the credit is based on whether the adoption is domestic or foreign, and whether it succeeds or not.

2. To claim any tax benefits the child needs to have a Tax Identification Number (TIN). There are 3 options, in order of preference -

a. Obtain a Social Security Number (SSN) using Form SS-5 filed with the Social Security Administration. This requires proof of US Citizenship or Permanent Resident Alien status, usually the birth certificate and court documents. This is the best option, as the child will need a SSN for the future in any case.

b. Obtain an Adoption Tax Identification Number ATIN). If you can't currently get a SSN (such as the birth parent isn't cooperating with your getting the birth certificate) the IRS will issue an ATIN if you file Form W-7A with the required documents. The number is good for 2 years and can be extended by providing evidence that the adoption is in progress but not yet complete.

c. Obtain an Individual Tax Identification Number (ITIN). These are issued by the IRS, normally to nonresident aliens who have business or investment ties to the United States that require them to file returns and pay taxes, but don't have an immigration status that would allow them to get a SSN. This normally wouldn't apply for a domestic adoption, and may not for a foreign one either.

With a SSN you can obtain all the child tax benefits, including the exemption, child credit, child care credit, adoption credit and earned income credit. An ATIN or ITIN does not allow the earned income credit. For that you would have to amend your return(s) later, after the child has a SSN.