MINISTRIES WHO HELP FINANCE ADOPTIONS:
• Show Hope - Adoption grants and financial assistance (615) 550-5600
• Our Creator's Hope - Adoption grants for qualifying Christian families
• LifeSong for Orphans - Matching grants and interest-free loans for adoption (309) 747-3556
• Ibsen Adoption Network - Links to adoption-related websites for Washington state families (360) 866-7036
• Christian Advocates for Adoption - Help with raising funds from friends and family in the body of Christ. (616) 669-0655
• A Child Waits - Adoption grants for adopting children with special needs or who are over age 5 and low-interest loans (866) 999-2445
• The ABBA Fund - Interest-free loans for qualifying Christian famlies (888) 775-3422
HOW THE ADOPTION TAX CREDIT WORKS
** This is not a substitute for professional financial advice and should not
be relied upon without consulting your tax advisor.
What is the Adoption Tax Credit?
The adoption tax credit is a valuable benefit for adopting families, but one of the most complicated tax law provisions applicable to middle-income families. The details of how it works, acceptable expenses, who qualifies and other "small print" items have been harder to understand. What follows is a very general set of guidelines.
As of 2009, you may be able to take a tax credit of up to $12,150 for qualifying expenses paid to adopt an eligible child. The adoption credit is an amount that you subtract from your tax liability. The maximum credit is $12,150. Also, the maximum exclusion from income of benefits under your employer's adoption assistance program is $12,150. These amounts are phased out if your modified AGI is between $182,180 and $222,180. You cannot claim the credit or exclusion if your modified AGI is $222,180 or more.
What are considered to be 'Qualifying Expenses?'
Qualifying adoption expenses are reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses (including amounts spent for meals and lodging) while away from home and other expenses directly related to, and whose principal purpose is for, the legal adoption of an eligible child.
At what point in the adoption process can I claim this credit?
Credit for expenses for international adoptions can be claimed only after finalization of the adoption.
What are the steps I should take to claim this credit?
The first step is to learn what the tax credit covers and how it works with other incentives, such as employer-paid adoption benefits. Check the IRS website for this information. Then you'll want to:
• determine your eligibility
• learn how the credit works with your particular adoption
• develop a system to track and document expenses
• work with a professional to do your taxes
What forms will I need to file with the IRS for this credit?
Form 8839 is the form you need to file. The form includes expenses covered by the Adoption Tax Credit, any payments or reimbursements you may have received from Employer Adoption Assistance Benefits and your child's Social Security or Tax ID number (required for filing).
Visit the IRS download page to view and/or download the forms you'll need for adoption-related tax filing. Forms are available in various formats and include:
• Form 8839 for itemizing qualifying adoption-related expenses
• Form SS-5 to apply for a Social Security Number for your child
Additional benefits and guidance:
Many states provide reimbursement of a certain amount of non-recurring adoption expenses. Be sure to check with your state tax office to learn more about it and contact your local IRS office if you need more information or direct assistance with preparing your tax return.
Finally, consult your own tax advisor to make sure you haven't overlooked anything!
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