[4onmybench]

Here's my idea. If we carefully planned everything w/ starting our adoption process and changed dh's W4 to where they took practically nothing out for taxes then put that extra monthly income into a savings account to help pay for fees/incidentals/travel expenses. etc. Would we be able to claim the tax credit in time so that it would cover what we owed for taxes? This assuming we started the W4 change as of Jan. 1 of next year.

I don't have a clue about taxes, tax credit or financing an adoption. So, I'm hoping one of you can let me know if this idea can work or not. And I know it wouldn't cover the entire cost but would enable us to take out less of a loan.

Thanks in advance!

[ahope4hannah]

Elisabeth,

I don't know the answer to your question but I think it is a great idea. I will be really interested to see what responses you get. Wish I would have thought of that. LOL

[becky]

It 'could' work...assuming your adoption is complete in 2006 and that your child comes home on an IR3 Visa (meaning both parents visited prior to the completion of the adoption) or is readopted before the end of 2006.

It would be less likely to work if you didn't accept a referral until next summer...you could always face delays that would mean the adoption couldn't be completed by the end of the year.

[tsawyer]

That would depend also on your individual tax situation. Do you make enough and pay enough taxes to get the full credit so that your idea will work? Do you make too much and you don't get any credit?

Beyond that, it is a matter of timing. If you planned to have it complete by end of the year and you change your withholding to be zero, you would be in big trouble if the adoption wasn't finalized.

The best option would be to do some tax planning to see if the number work. Find some other source of the money you could borrow from and continue to withhold the taxes. The plan would be to repay the loan when you can file your taxes and get the credit.

Beware of what would happen if you don't bring your child home until the beginning of the year. You would have to wait a whole year more to get the credit.

Tom

[JohnnaMJH]

Sorry to butt in here, but do you have to do the readoption to get the Federal Tax Credit? Our first adopted child came home on an lR3, but this one will be an IR4. I had no idea we'd be in a rush to get that done.

Thanks,

[foxl]

I think they state the year the adoption is final ... our state recognizes Guatemalan adoption so ours was the protocolo date.

Another tax thing: Anyone else on the big list, catch the posting about the bill currently in the House, to raise the Tax Credit to $15,000? HR 1561 Internal Revenue Code ... STARTING IN 2005 tax year. I am gonna track this one's progress.

[gdbe]

By any chance, did you hear anything about any changes in the income guidelines to get the tax credit?

Gail

[A_ROSE024]

That sounds like a great idea, however, you might not benefit in the end based on your income situation. You should consult with an accountant or cpa and see what advice they give you.

[Janette Monteil]

Iasked my tax person aobut that and he said that would work but MAKE SURE YOU DON'T SPEND THAT EXTRA MONEY ON STUPID STUFF. We didin't end up doing that in the end but I did think of that. I also asked him about exemptions and he said you can claim as many as you want but dont go nutso with them and claim like 20 or something. Do something reasonable like 8ish. Anyway talk to a tax person but My guy said it would be ok.

[Janette Monteil]

Originally Posted by JohnnaMJH

Sorry to butt in here, but do you have to do the readoption to get the Federal Tax Credit? Our first adopted child came home on an lR3, but this one will be an IR4. I had no idea we'd be in a rush to get that done.

Thanks,

Yes you do have to do the readopt to get the credit.

sorry

[sharonl299]

You will want to submit your dossier in the fall so that you're sure of getting a referral early enough in 2006 to make the year just in case your case is a slow one. The stress is already tough - you don't want to add the fear of not making it by year end to it.

[okstategrads]

Our daughter's adoption and readoption were complete last year and we were able to claim the tax credit. If this credit is "upped" will we get to claim any more of it (we got the full amount back,and not to sound greedy, but evry little bit helps )

[tookie12]

Its absolutely feasable IF the adoption runs smoothly, which, often does not happen. If you have an accountant i would ask them to run a BNA tax planning analysis....most accountants have this program or one similar where they can enter your last years info and then up to 10 different synopsis for future years. This would give you an idea what would be owed (along with penalties and interest) if for some reason your adoption is not completed within the nesessary time frame.


Good Luck!

[ExcitedMomtoBe]

I think it could work... we started in February (submitted our agency app and started our home study) and if all goes well, we'll be done by September or October. But we also accepted first available from our agency (ie. a boy). Had we wanted a girl, our wait would have been much longer and I would have been worried about the whole thing happening in a year. So, if you plan to request a girl, you'd definitely want ALL your paperwork in this fall, so you could be ready to go.

[Mom4Nicholas]

Advice from an accountant:

That will only work if your child comes home on an IR-3 visa and the adoption is complete in the same tax year that you are changing what you are claiming on your W-4.

PM if you need more help.

Good Luck