[bjhv]

through foster care! They said no matter when you adopted IF you adopted and state paid your cost then you CAN NOT get credit or refund. Any one have any info?

[MommyAlysia]

sorry I don't have any hard info. I have always heard that if you adopt a special needs child then you qualify for the full credit. I have also heard that all foster children are considered special needs to the IRS (though I know each state has their own guidelines). There are many here who are knowledgeable about the tax credit though so hopefully one of them will chime in and give you some good info.

[soupnazi]

If the child qualifies as "special needs" then it's covered.

[Joy2566]

As I understood it, we did not get a credit because we did not pay anything for the adoption.

[TRas]

If the child is special needs, you do not need to prove any expenses. You get the full credit. If he is not special needs, you get credit for the expenses rather than the full credit. For adoptions in 2010 and 2011, it's an actual refund - not just a credit like in prior years.

[marigold]

I got it for my son who was adopted out of foster care. I don't know why there is always someone from IRS who gets it wrong, but yes, we qualify for the credit. It is a larger credit if your child qualifies for special needs.

[TRas]

Here's a good explanation:
Adoption Tax Credit - How to Claim the Adoption Credit

[DianeS]

If the child qualifies as "special needs" by the IRS definition, then you qualify to get the entire amount of the credit.

The instructions for the Form 8839 say that if the child meets that definion, enter the entire amount of the credit ($13,000+ for 2010) in the line that asks you how much you had in qualified adoption expenses (regardless of what your actual expenses totalled, and regardless of whether you had any expenses at all).

If the child you adopted does not qualify as special needs, then you qualify to receive only the same amount of the credit as you paid for things out of pocket (qualified adoption expenses). But you should remember that those expenses can include gas for required traveling, meals, fingerprinting, CPR class, and other things the state does not pay for.

[MO_SingleDad-2B]

From the instructions for filing out form 8839:

Form 8839



A child is a child with special needs if all three of the following statements are true.

1. The child was a citizen or resident of the United States or its possessions at the time the adoption process began.
2. A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents' home.
3. The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. Factors used by states to make this determination include:
1. The child's ethnic background and age,
2. Whether the child is a member of a minority or sibling group, and
3. Whether the child has a medical condition or a physical, mental, or emotional handicap.

You may be able to claim a credit or exclusion for the adoption of a child with special needs even if you did not have any qualified adoption expenses. See line 24 and the instructions for line 5.

[Longing2bMom]

Who at the IRS told you this? Was it something official in writing or just told to you over the phone? Oftentimes, information given by the IRS telephone agents is incorrect. I work for tax accountants and our clients are given misinformation by the IRS over the phone all the time.

Generally, a foster child will be eligible for the full credit if they are considered "special needs". Each state has its own guidelines as to what is "special needs", so it depends on what state you are in if your child will meet the qualifications. For example, in my state (California), virtually all children adopted from foster care qualify, but in other states, the child must be disabled or part of a minority or sibling group to qualify. Generally, if you receive an adoption assistance subsidy than your child is "special needs" per your state's guidelines and you should be able to take the full credit. If your child is not "special needs" then you can take only up to the amount of your expenses.

[Larue]

If your child meets your State's definition of special needs, you qualify for the Federal Adoption Tax Credit, even if there were no qualifying adoption expenses. Here's another key part of the instructions for Form 8839 in case anyone gets audited:

If you check the box in column (d), indicating the child has special needs, be sure to keep evidence of the state's determination in your records.

[bluebonnet_72]

Since the adoption tax credit is not refundable, does this mean that parents adopting special needs kids will get the full credit refunded in the year the adoption is finalized?

[Debralous]

Originally Posted by bluebonnet_72

Since the adoption tax credit is not refundable, does this mean that parents adopting special needs kids will get the full credit refunded in the year the adoption is finalized?

You can carry it forward for 5 years.

[TRas]

Originally Posted by Debralous

You can carry it forward for 5 years.

Actually it's a refund now. You don't carry it forward anymore. For adoptions in 2010 and 2011, they will send you a refund check (minus any taxes you owe).

[jayzable]

So, if you don't owe taxes, and are actually due a refund, you get the $13K refunded plus your normal return?!?