[greenmama]

Can someone explain to me how the tax credit works for fc adoption...if it does? Thanks!

[hkolln]

We were able to take the federal adoption tax credit because we have an adoption subsidy (our daughter is thus considered special needs). I believe the child has to meet some qualifications and 1 is they have to be considered "special needs."

[greenmama]

Does that still apply if you really don't have any adoption fees though? Our DS is considered special needs but I am trying to understand how it works if you don't have expenses to claim.

[ncsingledad]

As far as I understand, if the child is "special needs" you can claim the whole tax credit amount, regardless of any expenses you may or may not have occurred.

[dachshunds4you]

Correct. If they are considered special needs, and by this even receiving the adoption subsidy, which ours does, you are able to claim the whole amount. It makes no difference that you spent nothing for the adoption.

With our taxes, when using Turbo Tax, it was really easy to do. It can be used up to 5 years. We only used a small portion of it because of our deductions last year, so we can continue to use it for 4 more years.

[hkolln]

Originally Posted by greenmama

Does that still apply if you really don't have any adoption fees though? Our DS is considered special needs but I am trying to understand how it works if you don't have expenses to claim.

If the child is special needs then you can use the entire tax credit. It doesn't matter if you have no adoption expenses (we didn't-my company reimbursed me).

[irelady10]

I believe that any child adopted from foster care is considered "special needs" as far as the adoption tax credit is concerned; and, if the child is "special needs", you don't have to account for the expenses of the adoption and can take the entire credit.

[DianeS]

... any child adopted from foster care is considered "special needs" as far as the adoption tax credit is concerned; .

This is not true. The situation has to pass several tests.

1 - The child must be a USA citizen.
2 - The child's parents must have been determined to be unfit to parent, by the state
3 - The child must have been placed by a licensed child placement agency
4 - The child has to have been determined, by the state where the child lives, to have special needs. (Each state has their own determination, each state decides for themselves)

The IRS goes completely by each state's determination of whether the child meets these criteria. In one state, every child in foster care may be labled "special needs", but in another state, it may only be children older than 8, or those children with medical needs. And so on. It's important to understand your own state's definition, before trying to figure out if a particular child will fit the definition.

If you've already adopted the child, then if the child receves a subsidy, the child is considered special needs. This is true even if the subsidy is just medical, or if the subsidy is $0. (Yes, a subsidy of $0 is different than no subsidy.) That's about the only consistency between the states - only special needs children receive subsidies. But not every foster child is considered special needs, and not every foster child receives a subsidy - and therefore not every foster child qualifies to receive the entire adoption tax credit. Some only qualify to receive back the amount the parents spent, just like a domestic adoption.

Hope that helps!

[hkolln]

Originally Posted by irelady10

I believe that any child adopted from foster care is considered "special needs"

This is not true. Not every child is considered special needs however if theyreceive an adoption subsidy they are then considered special needs.

[irelady10]

I stand corrected! Sorry for the misinformation.

(And, I meant "special needs" as far as the adoption credit law was concerned, not special needs in general.)