[LisaAnn1170]

Is it true that the Adoption Tax Credit can only be taken for failed adoptions if the failed adoption was domestic, not international?

As a PAP (for the second time around!), I'm being so very cautious emotionally and financially with the decisions we make.

We were just accepted by a placement agency and are starting our home study, so we're only at the very beginning of the process.

We've been through a Guatemalan adoption and know that things can change on the international scene quickly. I can't protect myself emotionally, but I'd like to *try* financially. With the wait as long as it is now for China, I fear that so much can change in the coming years and although I hate for money to be a part of the equation, it is, sadly.

BTW, I recognize an adoption is not "failed" if WE pull out. I'm trying to envision all scenarios, including the absolute worst case.

[KarenInCa]

The law states it can be used for failed domestic or SN adoptions (but from what I have read, it does not specify that the SN needs to be domestic).
And a failed IA would be (from my understanding), accepting the referral and then going to China and deciding not to adopt the child after referred to your family.
$10,000 adoption credit has many strings - MSN Money

[Mailbox13]

"The qualified adoptions expenses of a child, regardless of need, who is not a citizen or resident of the United States will not qualify for the adoption credit until the adoption is final (Code Sec. 23(e))"

In other words, you can't take the credit unless you finalize the adoption. I hope everything goes well with your adoption so that this won't be a problem.

[jessibird]

Karen in CA-Thank you soooo much for this article. DH and I have been trying to understand the credit for some time now since a family member is going to loan us some money until the credit goes through-Great Info!!

[Hmarie68]

The clincher on using the tax credit for failed adoptions is...you have to wait a full year to claim anything you paid towards the adoption, application fees, home study fees, profile fees and travel expenses etc. Our failed adoption happened in Dec '07 and it was domestic. We'll claim all of our stuff this next year. They may even require a letter from the agency-don't quote me on that. But, when I asked our tax lady...she wanted a SS# at first, you shouldn't need that if the adoption never went through...plus, I'm not even sure how we'd get it in the first place.

[sak9645]

The adoption tax credit cannot be taken for a failed international adoption.

Remember that countries rarely close or change their rules precipitously. There is usually a phase-in time, and people who already have referrals, or who are well into the process, will often be allowed to complete their adoptions.

Also, if you are worried about a country closing, or the U.S. telling Americans that they cannot adopt from a country, you can pick a country that has a history of stability and not choose one where there is a good deal of speculation that change is in the wind.

As an example, it was pretty obvious that things were changing in Guatemala, yet some families continued to begin Guatemalan adoptions even after many reputable agencies had stopped taking new applications and were counseling families to consider other countries. These families, in essence, gambled in a situation where the odds were not in their favor. And when you gamble, and take long odds, you often lose big-time.

China has always been a stable country, and one that has given prospective parents ample warning of an impending change in policies. Still, I would be very cautious about starting a China adoption at present, given the uncertain time frames. A two to three year time horizon from LID to referral makes me very uncomfortable, and I am a China parent with a great deal of respect and admiration for the way the CCAA has managed to keep politics out of adoption and to create an organized, ethical system. Too much can happen in two to three years for me to consider adoption from China a "sure thing" right now.

My personal belief is that China does not really like the current long waits from LID to referral, any more than adoptive parents do. I also believe that China is accurate when it states that the number of NSN infants and toddlers available for international adoption is decreasing. It makes a lot of sense, given the increasing prosperity of the country.

I have a gut feeling (and it is ONLY a gut feeling -- I have absolutely no inside knowledge) that, at some point -- and it could be soon or it could be a year or two from now -- the CCAA may well say something like, "In 90 days, we will stop taking new dossiers for a period of at least a year, so that we can focus on eliminating the backlog of waiting families as quickly as possible, and getting a good sense of how many NSN children will be available in the future. The only new dossiers we will accept will be for children age six or older, or children with certain moderate to severe special needs." While people already logged in would still get referrals, people fairly early in the paper chase stage, who do not want an older child or a child with a rather significant special need would be unable to proceed.

Do be aware that, if you use an agency that works in multiple countries, and the country of your choice -- whether China or some other county -- closes, the agency will usually try to help you switch to another country if you cannot complete your adoption. Yes, there will be some fees that you may have to pay twice, but a good agency will try to keep the financial exposure down. And you will almost always be better off financially if you stick with one agency, rather than switching agencies.

As a result, if you are very worried about country closures or rule changes, I would suggest that you define in your mind not just a first choice of country, but also a second and possibly a third choice, and then select an agency working in all of those countries. That would probably be the best way to minimize financial risk. This is probably NOT a good time for you to be looking at a China-only agency, although some of the largest China-only agencies may have insights into what is likely to happen, that are worth listening to.

It probably is also not a good time for you to work with some small "Mom and Pop" agency. These are perilous times for such agencies. They may not have the level of reserves necessary to weather a closure of a major country program, and could wind up reducing services to families or even going out of business. They certainly won't have deep enough pockets to help families who are affected by a country closure and want to change countries, without having to start all over financially.

It's important to distinguish among various types of fees. First off, there are fees you pay to your agency FOR ITS OWN WORK on your behalf. Those fees are often negotiable if a country closes or changes its rules midstream, making you unable to adopt there. As an example, you shouldn't have to make a second application fee, if you want to transfer to another program, since the agency has already accepted you.

Also, many agencies don't make you pay a substantial part of their basic fee until you accept a referral. If you never get a referral from the first country, or if the country closes and you cannot complete your adoption, the agency may well apply the final part of its fee to the adoption from the second country.

On the other hand, there are fees over which your agency has no control. As an example, the USCIS charges a fee for switching countries. Normally, you would have to pay that fee twice. In the past, there have been a couple of situations in which the USCIS has offered to allow a free transfer. In the future, if the U.S. decides to forbid Americans to adopt from a certain country, it might well do so again, to "soften the blow." But with most fees that the agency can't control, you will simply be stuck with paying them twice.

If you choose a country where two trips are the norm, for example, and the country closes after you have made one trip, you will have paid airfare, hotel, and other charges that you cannot recoup. There is simply no way around that. Travel is expensive. But if you go with a one-trip country, and the program closes, you will not lose money on these items, though you may be heartbroken. In most cases, you don't pay for travel until right before you leave for the foreign country; some costs aren't paid until you are actually in the country.

There are also fees that the agency pays on your behalf. Agencies vary in their policies with regard to handling these fees. Many agencies won't do anything for clients if they have already transferred funds received from those clients to foreign facilitators or lawyers, to the foreign government, etc. before a program closes.

However, some agencies try to be accommodating when clients are subjected to heartbreaking losses. I know of a situation in which families, some with referrals, from a country (not Guatemala) were devastated when provincial officials closed down an orphanage in the dead of night, removing the children. While the provincial officials claimed that the orphanage was paying birthmothers, there was some evidence that what really happened was that the orphanage was refusing to pay bribes to corrupt officials. Both the orphanage and the agency were known for high standards of ethics.

The agency made every effort to ease the families' suffering. Where families wished to drop out, heartbroken, the agency refunded virtually all of their money, taking a significant loss, since some of the funds had already been used to pay various country fees. The agency also applied funds to other programs, for families wishing to switch countries, and even retained an attorney in the foreign country, to advocate for the return of children who had already been referred to families -- some of whom actually went to the country for extended periods to find the children and plead for the right to adopt them.

This situation, of course, was unusual, and the agency's response was, perhaps, unusual in the extreme measures taken to help the families. But the agency had been around for 20 years or so, and knew the value of good client service. There are other agencies in the U.S. that also know the value of good client service, and even if they don't quite go to this extreme, many will do quite a bit to help clients fulfill their dream of being parents, after a truly unexpected, negative turn of events.

Obviously, an agency isn't going to do these things if you choose not to complete an adoption, especially if you were counseled about -- for example -- the risk that you might be referred a child outside the age range you requested. It isn't going to do these things if you take a chance on applying, even though you are counseled that you might be rejected because of something in your health history. And if an agency takes your application when most agencies are not accepting new applications for that country, you can be sure that it won't help you much if the country closes or changes its requirements.

But the good news is that, if you are careful in selecting an agency and a country, you can reduce -- though not eliminate entirely -- the risk of significant financial losses.

Talk to agencies before you apply. Ask them what happens if a country closes or changes its eligibility requirements, while you are in process with them. Ask what fees will be waived if you switch to another country, with the same agency, after such an event. Ask what fees will be refunded if you are too heartbroken to proceed.

Look at the track record of agencies that have faced such situations. Try to find families who were caught up in those situations, and ask what those agencies did for them. I think you will find that for every agency horror story, yoiu will hear some wonderful stories about certain agencies that "went the extra mile" for their clients.

Consider choosing a Hague-accredited agency, even if the countries from which you are considering adopting are not party to the Hague -- yet. While the track record of Hague accreditation is limited, to date, Hague accreditation is SUPPOSED to help ensure that agencies have policies and procedures in place to help protect clients from major financial losses. As an example, they need to have explicit refund policies and grievance procedures.

And really do your homework about countries. Listen to the unbiased experts, not the folks who are trying to get you to sign up with their agency, even if it doesn't make any sense to get started with a certain country. Pay attention to what the U.S. State Department is saying. Pay attention to what the Congressional Coalition on Adoption is saying. Pay attention to what the Joint Council on International Children's Services (JCICS) is saying. Contact the U.S. Embassy in the foreign country, if you wish.

Talk to lots of agencies, especially ones that have worked in a country for a long time. Get on as many parent listservs and bulletin boards as you can, to hear what agencies are telling families, but take what you hear with a big grain of salt. You can learn a lot from bulletin boards like this one -- but some boards are also rife with rumors that are so ill-founded that I roll my eyes in incredulity.

Checking out countries and agencies is not rocket science. You can do it, if you commit some time and effort to the process, and if you recognize that some sources of information are better than others.

All in all, I still believe that the vast majority of prospective parents WILL complete their international adoptions, without subjecting themselves to heartbreak and financial loss. But it behooves them to do everything possible to work towards such a goal.

Sharon


Sharon

[KarenInCa]

Welcome Jess.
I wanted to add two things. First, I was afraid of how to do taxes for that credit when we adopted our first daughter. I used TaxCut, and it really was presented in such a way that I was able to do my own taxes and click on whatever was applicable....it was easy. And we had 1,700 left over on the tax credit for the following tax year that was actually saved in the programming for me.
Second, remember that a lot of employers give an adoption reimbursement too. Both DHs and my employers give one, but we didn't realize it till we looked into it with our HR departments. The adoption usually has to be final, and the adoption credit can range depending on the generosity of the company you work for. And usually the adoption has to be finalized as with the tax credit.

[mdaisyq]

As Sharon mentioned, there are some ethical agencies that will bend over backwards to help families that have had a failed international adoption. Our agency was one of them when we had a failed first adoption.

Two weeks before we were to travel to Russia, in 1995, a Russian family came through our son's orphanage and adopted him. We were devastated but now realize that he was a truly fortunate little boy - he was able to stay in his birth country and be raised in his own culture.

After several months of grieving, we decided to adopt from Korea because of the stability of the program. Without our even having to ask, our adoption agency transferred all of the money we had paid toward the Russian program, which was substantial, because we had accepted a referral, to the Korean program.

I think it is best to work with an agency that has multiple country programs - adoptions can fail for many reasons and not just because a country closes to international adoption.

Back when we first started our adoption journey I hadn't even thought to research agencies via the internet and I guess we were lucky in stumbling upon an ethical one. There is so much information out there, now, so do your research.

[flowermom]

How were they able to adopt your son? there was no regulation on that? I can not even imagine! I thought once they send you the referral it is matched!

Sharon thank you for the long post..it helped me realize that I might want to stick with a bigger agency that does a few countries even though I was preferring the smaller China only agencies!

[mdaisyq]

Apparently it was allowed, even though we had signed all of the paperwork with our agency to accept his referral. The Russian family came through his orphanage during a temporary shutdown of adoptions from Russia where the US Consulate stopped issuing exit visas until Russia reorganized the adoption process. Russia (and the US Consulate) reopened and it was then, that the Russian family decided to adopt our son to be.

The surprising thing, in hindsight, is that we were not offered another referral from Russia, but then again, our son was considered a waiting child because he was a little over 1 years old (how times have changed!)

Our agency had never had this happen in Russia before so they were just as surprised as us.

[sak9645]

Lost referrals happen with all countries, even China.

I lost a China referral, when the child was adopted domestically. This was around the time of the big Reorganization of 1996, when slip-ups were more possible. It appears that the province may simply never have informed Beijing of the adoption, while Li Weilin's dossier was awaiting matching. Then, after referral, when Beijing contacted the province to make travel arrangements, it learned that Li Weilin was no longer available.

The loss was exceedingly painful. China issued me another referral immediately, but it took me a while till I could even look at it, and still longer till I felt that the referral was "as good as" the first one. The good news is that the child became my daughter, and that I now realize that she is definitely the child I was meant to have. She is utterly perfect for my family.

With Russia, family members may come forward to claim a child right up until the time of adoption. Russia is rather ambivalent about international adoption, and the authorities in some areas occasionally even try to find relatives and persuade them to adopt so that the child does not wind up going abroad.

With Guatemala, women sometimes decide to parent, after initially relinquishing their children. At least up till now, birthmothers had to give written consent three times prior to the finalization of the adoption, so they had opportunities to reconsider, even after their children had been placed in foster care.

Unfortunately, in some countries, children occasionally pass away or become too ill to be adopted, between the time of referral and the time of travel. This has happened with China, and it has happened with many other countries.

All of these situations may be considered "failed" adoptions. However, in virtually all cases, if the family is willing to proceed, and does not feel too overcome by grief, a new referral will be issued immediately. The Russian failure to issue a new referral is a bit surprising, but my suspicion is that the authorities were a bit negative about international adoption and glad to have an excuse not to let one proceed. I am surprised, however, that your agency didn't simply seek a referral from another region.

There are no international regulations that apply in this sort of situation. In fact, most professionals believe that a child should remain in his/her birth country, if at all possible. Therefore, most would support a decision by a foreign country to go ahead with a domestic adoption if an opportunity that was in the best interests of the child developed before a final decree was signed on an international adoption.

Sharon