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Originally Posted By Sue

We started the adoption process with an agency in March of 2001 and paid a fee of $4000. We have been selected to be the adoptive parents of a child and we will (hopefully) be bringing that child home in February of 2002 and the adoption will be finalized 6 months later (probably August). We will probably pay at least another $9,000 - 10,000 in the year 2002. Will I only be eligible for the $5000 credit since the process started in 2001 or will I be eligible for the $10,000 credit since the adoption will be finalized in 2002. Also, if I am eligible for the $10,000 credit, can I claim the expenses paid in 2001? All this information is very confusing especially since we are between 2 years... Thanks for any help you can provide!

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Originally Posted By MIchelle

My understanding of the law is that you will get the credit in the year finalized, for all allowable expense related to that adoption (so the expense you incurred in 2001 relating to your 2002 finalization would fall under the 2002 law and be covered by the $10,000 tax credit - so yes, you carry the $4,000 forward to 2002) - I think you can even get a credit if you don't finalize at all after a certain period of time (but hopefully none of us will have to research that)

As far as phasing out....Once your combined income (I THINK)taxable not gross hits $110,000 the credit is reduced by a %....

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Originally Posted By Sue

Thanks a lot Michelle! You have been very helpful!

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Originally Posted By Bridgett

I have a similar question... we became parents of our little adopted angel in November of 2001. Our adoption does not become final until May of 2002. Will we claim any of the expenses paid in 2001 (approximately $8,000 with another $7,000 to be paid in 2002) on the 2001 return or will we have to wait until the 2002 return to claim all of our expenses?

Thanks for the information!

Bridgett

[Archive]

Originally Posted By Bridgett

I have a similar question... we became parents of our little adopted angel in November of 2001. Our adoption does not become final until May of 2002. Will we claim any of the expenses paid in 2001 (approximately $8,000 with another $7,000 to be paid in 2002) on the 2001 return or will we have to wait until the 2002 return to claim all of our expenses?

Thanks for the information!

Bridgett

[Archive]

Originally Posted By Bridgett

I have a similar question... we became parents of our little adopted angel in November of 2001. Our adoption does not become final until May of 2002. Will we claim any of the expenses paid in 2001 (approximately $8,000 with another $7,000 to be paid in 2002) on the 2001 return or will we have to wait until the 2002 return to claim all of our expenses?

Thanks for the information!

Bridgett

[Archive]

Originally Posted By Bridgett

I have a similar question. We became parents of our little angel in November of 2001. We paid approximately $6,000 in years 2000 and 2001 prior to placement. We anticipate another $8,000 will be paid this year (2002) with the adoption becoming final in May of 2002. My question: Will we claim any expenses on our 2001 return or will we wait to claim all the expenses on our 2002 return?

Your help is appreciated.

Bridgett

[Archive]

Originally Posted By Don

You should have a cpa do your tax returns for 2001 and 2002. Because you have expenses in 2000 you may have something on your 2001 tax return. The credits typically follow in the year after the year of payment or in the year of finalization if they are the same.