Top Ten Tips for Avoiding Delays When Filing for the Adoption Tax Credit

1. Read the IRS guidelines carefully on what documentation is required and send them exactly what they are requesting. (See below for links to all the relevant IRS guidelines.) Do not however, send more than they are requesting (with the exception of #3 below). This is not a case where more is better. Drowning the IRS agent with extraneous papers is not helpful and might cause delays.
2. Send copies, not originals, unless specifically told otherwise, and even then, confirm that a copy would not be adequate.
3. Although the IRS does not specifically require that the taxpayer submit proof of payment of the qualified adoption expenses when your return is first submitted, it is highly likely that you will be required to submit this proof before they approve your credit; therefore sending it at the beginning will probably speed up the process. Acceptable proof of payment includes copies of receipts, cancelled checks, or credit card statements. Some tips from our Facebook Support Group:
   1. If you submit an adoption agency receipt make sure it is signed by the agency.
   2. A receipt alone is seldom sufficient proof. You should include proof of actual payment as well (such as cancelled checks, bank statements, credit card statements, etc.) showing that you paid the fees listed on the receipt.
4. Organize your supporting documents.
   1. Send them in the order they are requested on your return.
   2. Include a cover sheet listing the supporting documents for your claim.
   3. Include your name and social security number on each page of your documents.
   4. Label documents. For example, “Completed Home Study” or “Adoption Certificate” if it is not obvious on the first page.
   5. For multiple page documents, include sequential page numbers even if they are stapled. For example, p. 1 out 6, p. 2 out of 6, etc.
5. After you have your documents assembled and organized, make a copy in the likely event that you are asked to resubmit them.
6. One of the problems people reported was the failure of the documents originally submitted to be included with the return when it was transferred to the correspondence auditor’s desk. One trick reported by our Facebook Support Group is to file your taxes without the adoption tax credit. The next day submit an amended return with the adoption tax credit included and all required documentation. Thus, the amendment with the attached documentation ends up on the correspondence auditor’s desk, rather than being separated.
7. Make certain the official seal is visible on the copy of your adoption decree.
8. If you have enough expenses to more than cover the adoption tax credit, you may consider not including your costs for allowable birthmother expenses for domestic adoptions, since this may be a red flag for the IRS to audit. There is some debate amongst adoption and tax professionals whether these expenses should be included as qualified adoption expenses under the Adoption Tax Credit, but we are hearing reports that the IRS does not believe they should be included; therefore, inclusion might slow down your return.
9. If you are asked to resend in documents that you have already sent in with your original filing, assume, unless told otherwise, that the documents submitted were sufficient, but did not accompany your return when forwarded to the auditor’s desk. In other words, do not go looking for additional documents; simply resend the documents you already sent. See # 5 above.
10. Do not try to file electronically. You must mail in your return due to the documentation requirements.

And folks remember, be as pleasant as possible when dealing with IRS personnel. They are simply doing their job.

*The information in this tip sheet is intended for general education. Specific questions of how it applies to your individual situation should be asked of your tax professional. The Adoption Tax Credit is complex, and we encourage you to hire a professional.

** Also available in a printable version. Please do not print or use without crediting and including a link to Creating a Family. Thanks.