The Federal Tax Credits Blog

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Question: FEDERAL TAXES: Child Adoption Credit….?

Does this apply only if you go through an agency and adopt a child the usual way, or could it also apply if you get married and adopt the children that your wife had before she married you? My wife had 2 kids before we met. Their father relinquished his parental rights, and I adopted them and I am now legally their father. The names on their birth certificates now match mine and my wife’s. Can I take the Child Adoption Credit on my federal taxes? Can you also point me to a source for your info? Thanks!

Answer: It only applies if you are adopting someone outside your married or biological family. Changing from foster child to adopted child counts. Adopting your spouse’s child doesn’t count because if you are filing a joint return, the kids are already his. The child cannot have been related to either of you prior to the adoption.

The motivation here is to get homes to orphans, not change of parental duties.

Randall the EA

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Question: How does the 10,000 dollar special needs adoption tax credit work?

In the next year or two I am planning on adopting a special needs child. How does the 10,000 dollar speciall needs adoption tax credit work? I’ve read I get a flat 10K regardless of expenses. Is this true? Is there anyone in the know here about special needs adoption. Please only reply if you really know and not on how you think it works…. thanks.

Answer: It’s not just for special needs, it’s any adoption.
Here is a good link:

http://adoptionblogs.typepad.com/adoption/2004/11/the_federal_ado.html

I just did it for my adoption. My understanding is that the credit is for money spent, so if you spend 5,000 you can get a 5, 000 deduction, not the full 10,000. I do know if you don’t need the full tax credit one year that you can apply it over several years until you use it all. Also check out the IRS website…the tax credit recently increased. I did my own taxes on Turbo Tax delux and it walked me right through it. You can only get the tax credit the year the adoption is completed though. So, if you have some expenses this year and the adoption takes 2 years then you have to wait to claim the expenses. Actually, they make you wait until baby has a social security number or temp. tax ID number AND adoption is complete. Good Luck!

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