[auntiepippi]

With the year coming to an end and thinking about taxes (ugh!), I was wondering if anyone has received the adoption tax credit on their past tax returns? Or does anyone know the answers to these questions?

1. Does the adoption need to be completed? Child home?

2. Does the visa type make a difference and/or does the child need to be readopted if not a US citizen?

3. Does the child need to have a SS#?

4. Do we submit copies of cancelled checks, receipts, or what? Is there a special form to fill out?

5. Can we split the $ 10,000 credit across a couple years?

If there are too many questions (sorry, I kept thinking of more...), is there a good website that addresses this? I will ask our accountant these questions, but I thought I would ask here, too. Maybe this question will help someone else as well. Thanks in advance for your help! Donna

[becky]

Let me start this with...there is a lot of discussion about this topic and you can do a search on various threads and you will find a lot of people will tell you one thing but that may not be correct. You absolutely should ask the advice of your accountant. I will give you the answers to the best of my knowledge:
1. Yes the adoption must be complete. Does the child have to be home...supposedly if you have the adoption decree signed before the end of 2006 and you are receiving an IR3 Visa, you can use the credit in 2006, even if the child doesn't make it home before the end of the year (this is one of those shady areas, so again I would ask!)
2. Another shady area....as the way most accountants read the regs, yes the type of Visa makes a difference. If you come home on an IR3 Visa, then the child is automatically a citizen and all requirements for using the credit have been met. If you come home on an IR4 and your state requires additional measures to be taken before your child is considered a citizen (readoption/recognition of foreign adoption), then you cannot take the credit until those requirements are met.
So...even if your child comes home in 2006 on an IR4, if you have to readopt in your state before your child is considered a citizen and that doesn't happen until 2007, then you can't take the credit until doing taxes for 2007.
3. No, you can get a tax ID number.
4. There is a special form to fill out, but you don't have to submit anything unless they ask...so be sure you have some documentation in case you are asked for it.
5. You can use it for up to 5 years.

Again...you will find people who will tell you that they took the credit when they came home on an IR4 Visa before they readopted...but you need to be very careful of that because if you get audited (and claiming this credit is one reason your return might get flagged), you may find yourself in trouble. Be sure you seek the advice of an accountant who knows the regulations!

Good Luck!

[DD Amasa]

1. Does the adoption need to be completed? Child home?
Yes to both.

2. Does the visa type make a difference and/or does the child need to be readopted if not a US citizen?

No, the law was clarified last year to accept adoption decrees from other countries. Neither readoption nor citizenship is required for this federal tax credit, regardless of individual state laws. He's legally your responsibility to support and you can claim the credit.

3. Does the child need to have a SS#?

No.

4. Do we submit copies of cancelled checks, receipts, or what? Is there a special form to fill out?

There is a special form but you don't need attachments. Keep them in case you are ever audited down the road.

5. Can we split the $ 10,000 credit across a couple years?

Yes, it can be split up to five years.

[auntiepippi]

Thank you, Becky and DD Amasa, for the information; it was very helpful and clarified a few things. I searched on the topic and found answers to some things, but was still a bit unclear about it all. I really appreciate your help!

Donna