Adoption Tax Credit 2016

How do you claim the Adoption Tax Credit on your federal income tax for adoptions completed in 2015 and taxes being filed in 2016? Host Dawn Davenport, Executive Director of Creating a Family, the national infertility & adoption education and support nonprofit, interviews Becky Wilmoth, an Adoption Tax Credit Specialist at Bills Tax Service, and Josh Kroll, Adoption Tax Credit Coordinator at the North American Council on Adoptable Children (NACAC).

Hit the Highlights
  • What’s the maximum tax credit for years being filed this year?
  • What are the eligible adoption expenses?
  • Are expectant mother expenses (sometimes referred to as birth mother expenses) eligible to be covered by the Adoption Tax Credit?
  • When can you claim these your adoption expenses for the Adoption Tax Credit? For domestic infant adoption? For foster care adoption? For international adoption?
  • Is the Adoption Tax Credit is refundable for foster care adoptions?
  • How are foster care adoptions different under the Adoption Tax Credit than domestic infant adoptions?
  • Do you get more tax credit when adopting children with special needs?
  • Who determines if a child has special needs for purposes of the Adoption Tax Credit?
  • Is your child considered “special needs” if they are given access to Medicaid as part of their adoption subsidy agreement, but do not get a cash subsidy?
  • Can you lower your withholdings to have a greater tax liability in order to take better advantage of the Adoption Tax Credit?
  • What are your options if you do not have enough tax liability to take full advantage of the Adoption Tax Credit?
  • Will the Adoption Tax Credit offset self-employment tax? Or will it only offset income tax liability?
  • Can self-employed people use the Adoption Tax Credit?
  • How to apply for the Adoption Tax Credit using Turbo Tax when trying to claim the full credit when adopting a child with special needs from foster care?
  • We are in a lengthy international adoption process, and the expenses will span several years before the adoption is finalized. 1) Does the adoption have to be finalized before we can claim the tax credit? 2) Will we still be able to claim the credit for the total amount we have spent on the adoption, or only the amount that we spent during the year for which we are filing?
  • Would I qualify for the tax credit for adoption? I adopted in 2010 but got separated (now divorced). Is it too late to see if I qualify for the adoption Tax foster care for a special needs?
  • Do you have to have the child live with you for at least 6 months before you can claim the credit?
  • Is it true that if you’ve adopted before and you’re claiming a second adoption credit or deduction, you will most likely get audited?
  • Is the Adoption Tax Credit likely going to trigger an audit?
  • In an international adoption, if the adoption is finalized in country but that child is not permitted to exit the country, as is the situation currently in regards to hundreds of Congolese adoptions. Can a parent claim the Adoption Tax Credit?
  • How do you use the Adoption Tax Credit after a failed adoption?
  • Is it possible to file married but separately and still have one parent use the adoption credit?
  • How to use the income exclusion provision?
  • Is the Adoption Tax Credit applicable to embryo donation (sometimes known as embryo adoption)?
  • Is the Adoption Tax Credit applicable to second parent adoptions of same sex couples?
  • Is the Adoption Tax Credit applicable to unmarried heterosexual couples?
  • How do you file for the Adoption Tax Credit if you don’t have a social security number or Adoption Taxpayer Identification Number (ATIN) for your child?

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Image Credit: Alan Cleaver