[19802WPT]

This is my first post after LOTS of reading on the topic.

My husband and I signed up with the adoption agency from hell in 2006. We paid them $10,775 to be accepted into their program. We were then eligible to be viewed by birthmothers for a potential match. Making a long story as short as possible.....the agency was found to be on the shady side. After a privacy breach where they leaked all of the families email addresses to all of the other families, we began to collectively come together to find out we had been ripped off. Many families were waiting (about 60) and very very few babies were available all of which had severe health concerns or drug/alcohol addiction at birth. The families came together and complained to the state Attorney General as well as the Better Business Bureau. All of those investigations are currently in the works. Lots of bad stuff has been uncovered in this agency. It is not enough YET to shut them down. We, along with 5 other families, were also on a 20/20 type investigative television news report regarding our story.

Here is my question....I need DESPERATELY to be able to take the adoption tax credit for the $10,775 we paid into this scam agency. Technically, we did not have a failed adoption. We were never matched by the agency. As I read the IRS publication about the credit, it says to treat these expenses exactly the way you would treat expenses for an adoption not finalized in the current tax year. Our expenses are all from 2006, so we presumably should be able to take the credit in the 2007 return.

Am I placing too much emphasis on the fact that we were never matched with a baby? I can't say that we paid expenses to a birthmother who changed her mind. We never had a solid match. The agency is a scam and it is probably going to eventually be closed.

What would you all do? Would you roll the dice and take the credit?

Thanks for your help!
Lisa

[KIC1975]

I would talk to an accountant. We had a few questions about our first adoption, so that year we just paid the extra money to have someone do our taxes for us.

And, let me say, I am so sorry for what you went through. Adoption is already an emotional roller coaster with out going through what you had to.

[jgs]

We only just found out that we could claim losses on failed attempts of adoption (after $20,000.00 over the years) Tax people including HR block and Jackson Hewitts all assumed that you had to have a finalized adoption when I asked them. It wasn't until I got an adoption attorney that we found out differently. I went back to HR and we found the language in the tax law so that my tax amendments would be backed (plus I didn't want to pay for an amendment and they would find a loophole to not give me my money back) anyway the language reads any expenses towards a domestic adoption with an agency or adoption attorney are tax credit worthy or refund worthy (depending on whether you tend to pay out or receive refund) then just list the name of the agency address and phone on page 2 of the amendment. I figure even though you are at risk for them going out of buisness, you should file and at least the IRS would see that they were a legitimate buisness when you paid. When being the key word.

Its worth a try and the laguauge is there for "adoption attempts" in the adoption tax credit law. We filed for an adoption that failed but the language still applies.

good luck

[DianeS]

Yes, you can take the credit. It doesn't matter that you were never matched. What matters is that you made an adoption attempt, and that you paid expenses last year for that attempt.

The one thing that's grey about taking the adoption tax credit for an adoption attempt is whether you can take it again after you are successful. The IRS hasn't clearly defined whether the two (one scam and one success) were one attempt to adopt or two attempts to adopt. So just keep that in mind for later. But for now, it seems pretty obvious that you're in the clear to file for the credit on your 2007 taxes.

[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?

[Snick22]

Hi Toni - I PM'd you.

-Snick