[lynnpalm]

Hi
I know it is no where near tax time, but I have a question. For those of you who have been through a fos-adpt, is there a tax credit? Where might I find out information on this. Our situation is a bit different as it started out initially as an adoption, but things changed. We have been the fp for the past 2 years, but it looks like maybe, perhaps, hopefully (can you tell I know there are no guarantees) this road is leading towards adoption, finally. Any insight you have would be appreciated.
Thanks

[hkolln]

Tax Topics - Topic 607 Adoption Credit
The Adoption Tax Credit

[lynnpalm]

Thank you Helen!
I didn't know where to begin looking for this. I think my brain was fuzzled with trying to get costumes ready...
Happy Halloween

[hkolln]

Originally Posted by lynnpalm

Thank you Helen!
I didn't know where to begin looking for this. I think my brain was fuzzled with trying to get costumes ready...
Happy Halloween

Same to you and everyone else!!!

HAPPY HALLOWEEN!!! Don't eat too much candy

[4mykidz]

I would highly suggest using an accountant to help you out with this. We have gotten so much money back due to special needs adoptions I was amazed. You also have like 5 years to take it, so it gets spread out, only so much per year. Also, I only just found out that if a child is with you in foster care for more than 6 months out of the year that you can claim them as a dependant on your taxes.

[cris73]

I am curious about this also. They tell you that there is an adoption tax credit , but if you are adopting through foster care and there really arent any adoption expenses , do you still qualify for the credit? Can someone tell us how this works?

[AudreyE]

Originally Posted by cris73

I am curious about this also. They tell you that there is an adoption tax credit , but if you are adopting through foster care and there really arent any adoption expenses , do you still qualify for the credit? Can someone tell us how this works?

We adopted three children through foster care, spent nothing on our adoption except for legal fees, and that's all we could claim for the credit.

That's why I think the credit is kind of a crock... it was nice to get our fees back and I'm certainly not asking for any more than that. But how exactly does it benefit older domestic children when the only people who get a good chunk of it are the people who spend thousands adopting privately or internationally?

Audrey

[momagain5]

hi,i am wondering if you got all the info you needed.was your adoption recently?from what we have been told families that have adopted a foster child,can get the tax credit.they may have to qualify as special needs,but most foster children do.

[fostermomintx]

I adopted my son from foster care and he was classified special needs and I was reimbursed the costs of the adoption by the State. I also used part of the Adoption Tax Credit last year and can use it for up to 5 years. I'm not sure about how it works but I get my taxes done by a professional so I hope they know what they're doing!

My son was 3 at the time and is bi-racial and I guess that qualified him as special needs. Don't really understand that part either. He also had siblings that were previously adopted (not sure if that makes a difference either). I guess I just assume all those involved in this understand the ins and outs of the tax credit since obviously I don't...

[cris73]

So in a nutshell the credit only reinburses what you pay out? If thats the case I dont know why they are hypeing it up for adopting children from foster care! It isnt really going to help those parents at all. It will only benefit the people who adopt through an agency and have huge fees or something along those lines. Not that it really matters. We were going to adopt before they told us about it and we still are , But they shouldnt be talking about this credit for foster kids if that isnt the case.

[kermitdfrog]

This year the adoption tax credit is a little over $11,000.00.

If you adopt a child that is considered "special needs" than you get the full credit amount (as long as you had paid out that much in the year in taxes, if not then you can split it up for the next few years). It does not matter how much you paid out for the adoption.
Along with the credit you can deduct any amount it costed you for the adoption like attorney fees, fingerprints and so on.

If the adoption is not considered "special needs", then you can only claim what you paid out for the adoption.

For instance if my dh paid out in taxes last year on his W2 $15,000.00 and we did have a special needs adoption finalized so we would receive the full $11,000.00. Then we would deduct any amount paid for the adoption.

I hope that made sense?

[DianeS]

kermitdfrog is correct. If the child you adopt is a special needs child from foster care in the USA, then the parents can claim the *entire* amount of the adoption tax credit, regardless of how much money the adoption cost.

It's the only type of adopton where that happens. In any other type of adopton (domestic newborn, international, or foster care of non-special needs child), then you only get to claim the amount of your expenses.

So for many of the children waiting in foster care, the adopton tax credit is a HUGE deal and a very big incentive for families to adopt them instead of someone else.

[AudreyE]

Our adoption was 10 years ago. And yes, our children were special needs. So unless I'm remembering incorrectly, the rules may have changed since than....

Audrey

[4mykidz]

The tax credits are a huge HUGE benefit when adopting from Foster Care. It is complicated because it does seem that it is only reimbursement of expenses, but you actually get something like $10,000.00, you have 5 years to get your credits. I certainly couldn't figure it out, but our accountant handled it and we have been getting large refunds (more than we pay in) since our first adoption three years ago. We also claimed our foster children. If a foster child is with you for more than 6 months out of the year, you can claim them on your taxes. A lot of people do not know that. The accountant really helps.

[waited2long]

Originally Posted by 4mykidz

The tax credits are a huge HUGE benefit when adopting from Foster Care. It is complicated because it does seem that it is only reimbursement of expenses, but you actually get something like $10,000.00, you have 5 years to get your credits. I certainly couldn't figure it out, but our accountant handled it and we have been getting large refunds (more than we pay in) since our first adoption three years ago. We also claimed our foster children. If a foster child is with you for more than 6 months out of the year, you can claim them on your taxes. A lot of people do not know that. The accountant really helps.

About how much does an accountant cost?