January 08, 2014
2013 Tax Season: Receiving Your Full Credit
Tax season is coming up, and that means it’s time to start preparing. If you’re an adoptive parent, especially, there’s some special information you need to take into account to make sure that you receive the full benefit of your adoption tax credit. We’ve culled from different sources to help provide all the information you need to ensure that you’re fully prepared and able to receive the entirety of your credit.
First of all, you apply for the adoption tax credit if you adopted in 2013 and you paid out of pocket for expenses relating to your adoption. The amount of money you are entitled to directly correlates to how much you spent on your adoption, with the exception of if you adopted a special needs child — then you are entitled to the maximum amount availble, which is $12,970 for 2013.
This is a worksheet for figuring our your adjusted gross income: Instructions for Form 8839. If you have income that is excluded from tax, then you must add it back in to determine your final income range, which will determine which percentage of the adoption tax credit you receive. The Foreign Earned Income Exclusion will help you determine this.
Here are a few key phrases you need to know:
Eligible child. The adoption tax credit is only available if you adopt an eligible child, that means a child who is not yet a legal adult, under the age of 18. The must be a US citizen or resident alien, and unable to care for themselves on their own.
Eligible expenses. These include: adoption fees, legal fees, court costs. Expenses for a failed adoption can only be considered if followed by a successful adoption. Depending on when your expenses were paid, that will affect when you receive your tax credit. If you pay expenses before the adoption, the credit is paid out in the year after the expenses were paid. If you paid your expenses in the same year your adoption become final, you take the credit in that year. If you paid expenses the year after the adoption, then you take the credit in the year the expenses were paid.
If your child doesn’t have a SSN, then you will need to get an adoption tax ID number for them, and that information can be found here: Adoption Taxpayer Identification Number.
Here are some additional resources that will also be of help:
Internal Revenue Code Section 23
Revenue Procedure 2013-35 2014 adoption credit and phase-out amounts
Revenue Procedure 2013-15 2013 adoption credit and phase-out amounts
Revenue Procedure 2011-52 2012 adoption credit and phase-out amounts
Revenue Procedure 2010-40 2011 adoption credit and phase-out amounts