The tax deadline for most Americans is quickly approaching. Unless you live in a state impacted by severe weather, like California, Alabama, or Georgia, your deadline to file 2022 taxes is April 18, 2023. The good news is that, in most cases, you can prepare your taxes yourself. If you have adopted recently, these tips will help you maximize your 2022 Adoption Tax Credit claim.
Maximizing the Adoption Tax Credit
1. Educate yourself.
Check out the CreatingaFamilyEd.org Adoption Tax Credit 2022 online course with two of the nation’s leading experts* on the Adoption Tax Credit. The course provides an excellent overview, including information on advocating for the return to refundability.
You can also use this course for education credits for adoption or continuing education for foster care. We provide a Certificate of Completion when you pass the quiz at the end with an 80%.
2. Get proper documentation for special needs.
When you adopt from foster care and plan to claim a child with special needs, you must have a signed and dated copy of your Adoption Assistance Eligibility Determination. Some states call this form a Subsidy Agreement.
3. Gather all proof of payment.
You must have proof of payment for all qualified adoption expenses, not just the receipts. Proof can be in bank statements, credit card bills, etc. You only have to submit this proof to the IRS if they request it. However, keeping it in a safe, marked file for seven years from your filing date is critical.
4. Understand qualified expenses.
Even though you can legally pay a birth mother’s expenses, they are NOT considered “qualified adoption expenses” under the Adoption Tax Credit code.
5. Claim the most significant expenses first.
Chances are good that if you adopted an infant privately or did international adoption, you will have incurred more expenses than the amount of the Adoption Tax Credit. Start with the more significant and confirmed expenses first. If you are uncertain whether a particular expense would be a “qualified adoption expense,” don’t include it.
6. Keep it in a safe place.
All your taxes and Adoption Tax Credit documentation should be stored safely and clearly marked. Keep them for seven years from the filing date in case the IRS audits your returns or the Adoption Tax Credit becomes refundable again.
7. Make good copies.
All the originals of your records, proof of payment, and related documents should be copied and stored in a safe place, especially for any foreign documents you hold. They may fade quickly and become illegible within a few years.
8. Keep name changes consistent.
Be sure to change the name on your child’s social security card once the adoption is final. The child’s name on the adoption decree should match their social security card.
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9. Mark it all!
If you file a paper tax return, must amend your return, or the IRS asks for documentation, write the primary taxpayer’s name and social security number in red permanent marker at the top of each paper you submit. Please put it in the same spot at the top of each page (e.g., top right).
10. Choose an experienced tax preparer.
Avoid assuming that every tax preparer you contact will know about the Adoption Tax Credit! By asking them key questions, you can gauge their experience and comfort with maximizing your claim.
If they tell you something that conflicts with information in the CreatingaFamily.org Adoption Tax Credit Headquarters resources or the most current CreatingaFamily.org Adoption Tax Credit podcast, ask if you can send them the link to the podcast.
Before you agree to pay them a “research fee,” ask the tax preparer to read the Instructions to IRS Form 8839 thoroughly. They can get most of their questions answered there. Remember that if your tax preparer is uninformed or inexperienced in the Adoption Tax Credit, you can switch gears to use a knowledgeable tax preparer located in another state if they work remotely, which many do.
What to Do if You Need MORE Help
We are grateful for our guest experts* who appear annually on our CreatingaFamily.org Adoption Tax Credit podcast. They have extensive resources and offered their contact information to our readers for additional support.
- Josh Kroll is the Adoption Subsidy Resource Center’s Coordinator at the North American Council on Adoptable Children (NACAC). He can be reached at firstname.lastname@example.org.
- Becky Wilmoth is an Enrolled Agent and Adoption Tax Credit Specialist with Bill’s Tax Service. She can be reached at email@example.com or www.billstaxservice.com.
Have you filed your taxes yet? We’d love to hear your ideas for making the process smooth!
Image Credits: Tara Winstead; Arina Krasnikova; Nataliya Vaitkevich