Adoption Tax Credit 2012-2013

It is tax time again, and adoptive parents have lots of questions about the Adoption Tax Credit for 2013. Our guest experts to talk about this credit are Mark McDermott, adoption attorney and adoption tax credit expert; and Josh Kroll, the adoption tax credit expert at the North American Council on Adoptable Children.

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Hit the Highlights
  • Summary of the new adoption tax credit for 2013, 2014 + that passes the Congress in Dec. 2012.
  • How does the adoption tax credit for 2013, 2014 + treat different types of adoption: International adoption, domestic infant adoption, foster care adoption?
  • Our tax preparer said today that the form 8839 used for the adoption tax credit is delayed until the end of February. We didn’t know this. We went ahead and filed and will send an amendment once the form is available.
  • What type of proof is required to be submitted along with the tax return claiming the adoption tax credit?
  • What type of records should adoptive families keep to document expenses for the adoption tax credit?
  • Why must the adoption tax credit for 2012 and 2013 be a paper filing rather than an electronic filing?
  • After receiving the adoption tax credit, is this a form of income or considered exempt like foster care payments? We have not received a 1099 and we are unsure if we are supposed to pay taxes on this.
  • Is the adoption tax credit available for stepparent or second parent adoptions/same sex couples?
  • If we can’t use the entire credit on the year we claim the credit, how many years do we have to use the credit?
  • When does the adoption have to be finalized to count towards the 2012 tax year? Does it have to be by 12/31/12, or just have to be started in the year and finished by a certain date?
  • I am really confused about the adoption tax credit and just need some 1st grade translation. I adopted my son in 2009 through the foster care system, which qualifies him as a special needs child; however, I did not claim the tax credit in 2009. I’m trying to determine if it’s worth going back and amending the taxes for that year. We did not have expenses when going through the foster care system, so I’m trying to understand how the $12k tax credit works.
  • Does the Adoption Tax Credit apply to embryo donation/embryo adoption?
  • How are loans and grants for adoption treated under the adoption tax credit?
  • How are employee benefits treated under the Adoption Tax Credit?
  • I paid an adoption agency around $10,000 in fall 2008 to find a birthmother. I matched in October 2012 and paid around $6000 in birthmother expenses. In January 2013 I paid a second Texas agency that needed to be involved $5000. I addition to that, there are homestudy and homestudy update expenses every year. In late January the birthmother decided to keep the baby. I have not filed for any tax credit before because I had not matched. What do I do?
  • How are expenses for failed adoptions handled with the adoption tax credit?
  • We live in Florida and adopted in 2012 an 11 year old Chinese orphan with epilepsy. We earn “too much” to get any tax credit. Since she is special needs, are any exceptions made? We may be considered earning too much, but we sure feel the hit. Is there any hope to receive any credit at all?
  • I have a tax question about claiming a dependent. Our son was placed with us July 5, 2012 and we finalized January 10, 2013. We asked H&R if we could claim him as a dependent on our taxes, but we were told no since he wasn’t with us for a full 6 months. (Missed by 5 days). However, if a child had been born to me Dec. 31, 2012, my understanding is that I could claim the child for 2012, so this 6 month rule doesn’t make sense for our adopted child. Does someone know whether we can claim our son on our 2012 taxes? Not for the adoption credit, but as a dependent?
  • We were matched with 2 toddlers in June, but they didn’t move in full-time until September. The adoption will be final the end of this month. We were told that we couldn’t claim the child tax credit b/c they haven’t lived with us for 6 months. Don’t know if it makes a difference but we don’t receive any financial support from the state.
  • I adopted my granddaughter. The process started in 2011, and the adoption was finalized in 2012. She is considered special needs. This year I do not have any earned income, only state issued allowance monthly for her room and board. Do I qualify for the adoption tax credit?
  • We adopted a special needs child in 2011 and received the whole tax credit back. We are adopting special needs children in November and I do not fully understand the difference in the tax credit for 2012. The person said we could only get credit if we had a liability. We do not owe any taxes, does this mean we get nothing back?
  • My husband and I are pursuing a domestic infant agency adoption. We don’t pay enough in taxes to take full advantage of the Adoption Tax Credit and my husband’s parents are going to pay our placement fee for us. Can they claim the tax credit on their return?
  • I finalized my adoption of a special needs child in November 2012, the total amount of income that I made is about $4000 from employment for 2012 and I only paid about $100 for adoption expenses. Will I qualify for any of the adoption credits?
  • I’m in a same-sex relationship. We had a foster daughter that went to adoption but was told only one of us can adopt her. So, my partner adopted her. It was domestic and special needs (we get the subsidy). My partner doesn’t work, so I am head of household. If I claim both my partner and our daughter as dependents can I qualify for the adoption tax credit even though I’m not listed at parent but my partner is?