[wdean20]

Last year I started a thread here on how the adoption tax credit can be used on a failed adoption. I recieved many replies to my thread some helpful, some not, a few were insultive. Some people were affended that I would even think about claiming a credit for a failed adoption when I have no baby to care for. They thought I was trying to get something for nothing. However, the pain and anguishment that my wife and I have been through is enormous. With that being said I would like to address those who may have a similar situation by saying that YES you can claim this credit. I have the IRS check to prove it. If you are in this situation and would like to know more please respond to this thread. I will be happy to help you with the specifics.

[usocwazee]

I am very interested please pm me all the info you have. We had a failed adoption early this year due to a scam and all of our expenses were paid this year. I did get some forms from the irs however they dont really explain when the exemption can be made. Thank you so much for your help!

[spaypets]

I thought you couldn't claim the tax credit until the adoption was finalized. If the adoption wasn't finalized I don't see how you could legally get the tax credit? Did you eventually finalize another adoption? I suppose you could add the expenses of the failed adoption to the successful one.

[wanttobeparents]

No, the adoption does not have to be final to claim the tax credit, you can take it in the year that you pay the expenses.

Rather than put a child's social security number, you put the name of the attorney/agency you had the failed adoption through and claim up to $10,000 for each domestic attempt. I claimed 2 failed adoptions on 2002 tax returns. My accountant attached the expense report along with the attorneys names.

Peggy

[spaypets]

Ahh, I see from the IRS website that the adoption only has to be finalized if the child is adopted internationally. That's why I couldn't take it when I incurred the expense.

[luvbeinmom]

Hi, saw post earlier yet was happy and new mom, and did not need info at that time, yet now today, have a "failed adoption. Please pm me with the info if possible. We are interested as can use what ever help we can get, to try again...thank you.

[adoptare]

My heart goes out to all those who have experienced a failed adoption. We had one earlier this year but were able to successfully adopt a month later. With perseverance, you will be able to adopt too.

We were able to claim successfully our failed adoption expenses. The IRS forms and regs are not clear about this, but my experience and others' show that these expenses qualify for the credit. The only hitch is that our credit for the successful adoption will be limited by the amount of credit taken for the failed adoption. In other words, you only get a $10,000 credit for both the failed and the successful adoption.

[Sarah0518]

All this time I've been misinformed also that we wouldn't be able to recoup our lawyer fees for the adoption we had fall thru in November of this year. Thanks for this thread.

An for those that gave you so much grief last year - a BIG THUMBS down. I know for me it isn't about losing the money, it's about having to worry about having less or no funds available for another match. I'm sure that's how everyone else feels too. We've saved really hard and just want so much to be someone's mommy & daddy!

[mtbatch]

We had a failed adoption this June 2004; we live in Ga., but the ** was in Calif; we lost @ $6,000 to agency fee, social worker fees, attorney fees, and living expenses; we would like to adopt again; can we claim a tax credit for year 2005?

[adoptare]

As noted above in this thread, you can claim the adoption credit for expenses incurred in a failed adoption. You asked whether you can claim this credit for 2005 for a failed 2004 adoption. I say maybe.

The IRS is far from clear as to "when" you can claim the credit for a failed adoption. IRS guidelines determine the timing for taking the credit based on when the adoption becomes "final." However, IRS guidelines also say the adoption does not have to be finalized in order to take the credit if the child is a US citizen or resident, as in your case. The lack of clarity is due to the fact that people can claim the credit even though the adoption is never finalized, but such folks must determine when they can take the credit based on when the adoption becomes final!

I claimed failed adoption expenses I incurred during 2002 on my 2002 tax return. There was no problem. Speaking from experience, I would recommend claiming the credit on your 2004 tax return, not your 2005 return. But due to the lack of clarity, you might have no problem claiming the credit for 2005. If you really want to investigate the rules for when you can take the credit, visit page 3 of this IRS document:

http://www.irs.gov/pub/irs-pdf/p968.pdf

[Soon2bmomagain]

Is it true that you can only claim the amount once...that if you have a successful adoption at some point in time, you can only claim to $10,000? We have had over $10,000 of just bp expenses this year alone in failed adoptions and plan to continue. This does not include agency fees, home studies, etc. Does someone know the answer to this question? Thanks for posting this out there!!

P.s. Anyone who thinks that we are "getting something for nothing" has not experienced a failed adoption plan or been scammed! We happened to have had three failed adoption plans this year alone and could not continue if we could not claim the bp expenses for these plus a hopefully successful adoption plan.

[luvbeinmom]

just a quick fyi:
we had a failed adoption too in 2003, the key to claiming was placement of child in our home( for an american infant) , we were able to have child less than month, yet talked with our accountant and we qualified. We hare still hopeful to adopt again, yet we all know may/may not happen. We decided to go ahead and take the loss now with the failed adoption, had to list name, dob and agency name and address and tax id number, we actually will get a small credit back for 2004 too that we did not use from 2003.. We know we cant claim the same expenses on our next (still hoping) yet our agency has a placement fee of $6500 more that we would need to pay, so we can claim that and any additional.....anyway each adoption is seperate, yet you can't use same expenses occured more then once. (we do not need to pay our agency again after failed, thus no additional cost for us, unless we are able to adopt again...) anyway hope this help. we have also adopted before and also received tax credit then, yet at time was only $ 5000 per year allowed.....with tax laws always changing we were advised to claim now instead of waiting, ......anyway hope info helps...

[joskimo]

I want to thank you all for this information. I am very nervous about adopting domestically but it's good to know if it falls through that there is some recourse.

One thing I didn't quite get if we claim expenses for a failed, if it's under the $10,000 threshold then we can claim the difference on a subsequent successful adoption right? Is this an annual limit. You can claim $10,000 each adoption right? Also we are looking at both private domestic and foster care adoption, the FC adoption may be special needs in which case we get the automatic $10,000 credit w/o having to show expenses, would that be reduced by the amount we claim for a failed adoption? Even if in different years?

By the way, anyone who is a jerk about these questions is just that, a jerk. We are not made of money but have big hearts. I posted a question about recourse after a failed adoption and was basically told that it's more then the money. I know this, I'm not cruel or stupid, but in order to keep in the game I'd want to be able to recoup expenses to start again.

[wanttobeparents]

The $10,000 is for EACH domestic attempt. We had two failed adoptions in 2002. Each was a little over $5,000. We claimed each seperately for a total of over $10,000. In 2003 we had a successful adoption. We claimed a full $10,000 for that adoption since the amount was over $10,000, completely seperate from the previous two attempts. The credit can be claimed in the year the expenses are incurred.

Peggy

[mtbatch]

Peggy,

That is the exact answer I'm looking for, but do you know if the laws have changed since 2002; we would like to have a tax credit for the $6000 we lost in June 2004, and hopefully adopt again soon, and claim that $10,000 when it becomes successful (perhaps we could finalize in 2005, even if we get a baby in later 2004). Thank you for your response.

MTBatch