[loomistunes]

And who is elligiable.. I adopted 2 children this past year...1 was a subsidized adoption and the 2nd was not susidized..How does this work??? Thanks in advance, Jen

[tinatyme]

I would google it. There is a lot of information on the web about the adoption tax credit. I think you are definitely eligible for it for both children. As far as my understanding it is $10,000 which is applied toward your taxes. Not all of it is used in the same year so it can be used for the next 5 years. I'm not sure if it is $20, 000 for two children. I have read about it a lot this year and plan on asking my tax professional to apply it during tax season.

[kckm]

Hi Jen

Visit this sight it will give you some info.

Tax Topics - Topic 607 Adoption Credit

From what I understand after finalization you are allowed to take the tax credit (it's a little more than $10K). I think the tax credit is based on your adoption related expenses. It is also based on the amount you paid the government. If you paid >$10K in taxes for this year you can take the full tax credit $10K, but if you paid <$10K, lets say $7K you can only claim that amount for the first year and carry over $3K to the next year. I'm not sure if the credit is solely based on adoption related expenses. You will have to check with your tax adviser. If you don't use one, you may want to just for the tax credit period. P.S. I think it's per child.

[DianeS]

The adoption tax credit is REALLY helpful.

First - there is an income cutoff. If you make more than around $160,000 per year, you won't qualify. I'll assume you make less...

Secondly, for a regular non-special needs adoption you can claim only the amount that you spent on the adoption OR the total amount of the credit - whichever is smaller. BUT if you adopt a special needs child from the US foster care system then you get to file for the entire amount of the tax credit (regardless of how much money the adoption actually cost). This is an incentive to make people willing to adopt a special needs child who might otherwise go without a home. Since one of your children gets an adoption subsidy, he definately qualifies as special needs and you qualify for the entire credit with him no matter how much his adoption cost. Since your other child is without a subsidy, you can probably only claim the amount his adoption cost. (Although, if he has special needs, give a try at seeing if he'll qualify for the whole amount even without being so special needs as to get a subsidy. Some people are successful at that.)

Thirdly, how to do the paperwork. It's fairly easy. Do your taxes normally. Figure up your income, your tax, your deductions, charitable giving, the whole thing all the way through looking in the tax booklet at the big chart and finding your tax. THEN you subtract the amount of adoption tax credit that your children qualify for, and subtract that number from your tax. Chances are, that will reduce your tax to $0 and you'll still have some credit left over. If you have some of the tax credit left over, you can use it next year.

I hope that helps. If you have more questions, post them!

[tinatyme]

Hi Loomistunes,

If you adopt through foster care and your child receives an adoption subsidy then they are considered special needs and you can receive the full adoption tax credit without having to document expenses. This would probably not be the same with your child who is not subsidized but I'm not sure. The following link has been a helpful web site for me and talks about foster to adopt situations.

NACAC | Public Policy