When and if an adoption tax credit can be claimed is often determined by different guidelines. These guidelines often refer to the adoptive family, the type of adoption completed, and the adopted child.
The Adoptive Family - In order to claim the 2011 adoption tax credit, adoptive parents must have completed the adoption of a child. The adoptive parent's income must also fall within certain limits. In 2011, an adoptive family needs to make less than the federal modified adjusted gross income of $185,210 in order to receive the full tax credit or refund. A family that makes more than the federal modified adjusted gross income of $225,210 will not be eligible to receive the adoption tax credit. Families with incomes in between these two figures will see their adoption tax credit reduced. Know that these income limits change yearly. It's important to stay up to date as the adoption tax credit changes each year.
The Adoption Finalization Date - If and when different adoption expenses can be claimed are determined by the type of adoption completed and the finalization of that adoption. Adoptive parents of special needs adoptions and international adoptions can file to claim the adoption tax credit or refund in the same year the adoptions were completed or finalized. Other domestic adoptions with incurred adoption expenses can file for the adoption tax credit the same year the adoption is finalized or the year following the adoption expenses were incurred.
The Adopted Child and Type of Adoption - In order to file for the 2011 adoption tax credit, one of the following must have been completed:
the adoption of a special needs child, or foster care adoption,
the adoption of an internationally adopted child with qualifying adoption expenses,
or the adoption of a child born within the United States through a domestic adoption with qualifying adoption expenses.
The adoption of a step-child does not count and will not qualify for the adoption tax credit.
Filing the Paperwork - Adoptive parents must file a paper tax return along with Form 8839, Qualified Adoption Expenses, and attach documents supporting the adoption.
Seeking Support When Filing for the Adoption Tax Credit
Taxes can be very confusing. When it comes to claiming the adoption tax credit, it can be even more confusing and for this reason it may make more sense to find someone to help you sort through all your adoption paperwork and complete the necessary forms. Remember, in order to claim the adoption tax credit, you will need to gather numerous documents to prove your family's eligibility.
I recently asked a tax preparer for information regarding the adoption tax credit and what advice he'd offer adoptive parents looking for someone to help in preparing their taxes. Here is his advice:
"As for your question regarding what someone should look for in a tax adviser or tax preparer my response is simple and straight forward. For the adoption credit I would find a preparer/adviser that has thoroughly done their research on the adoption credit issue as well as one who is willing to do any additional research that is necessary. I would look for someone who is not going to take the first IRS "No" as final. I have found in many situations the first response is not the correct response. Think of the IRS like an insurance company, the first level of personnel are trained to deny all claims. When you go a little deeper you actually find the ones who do the extra work to help your client. When a tax preparer does his due diligence and holds the needs of the client as the highest accomplishment, then good things can happen." ~ Daniel L. Tenney, Senior Tax Adviser V of H&R Block
SOURCES:
Adoption Credit and Adoption Assistance Programs for 2010 and 2011
Six Things to Know About the Expanded Adoption Tax Credit
Interview with Daniel L. Tenney of H&R Block
Mr. Tenney is available to work with adoptive families in all 50 states and can work over the phone, through the internet and even has Skype capability. Feel free to contact him with any of your adoption tax credit questions at daniel.tenney@tax.hrblock.com
