11. October 2013 · Comments Off · Categories: Adoption · Tags: , ,

us adoption tax credit

My husband and I are considering an international adoption. We normally overpay on our taxes and as a result get money back every year when we do our taxes. I am not sure how this works with the adoption tax credit. Will we get that much more money back? Just trying to figure out if we can financially afford it and this information would really help.

Answer by Flaming Troll Misogynist
See people…it’s all about the child!

Answer by BLW_KAM
The adoption tax credit is deducted from your tax liability in the year an international adoption is finalized. You can include amounts paid in previous years for an adoption finalized in the current year.

Let’s say your tax liability before the adoption tax credit is $ 10,000, your adoption tax credit is $ 5,000 and you had $ 12,000 withheld during the year. You’ll be getting $ 7,000 back.

10,000 – 5,000 = 5,000 -12,000 = 7,000 refund

Of course all of this is dependent on what expenses you had, what your adjusted gross income is and all those other lovely IRS rules. You can read more about in the link below.

Answer by <--->
pretty much, what you spend on adoption, up to like 11K will reduce your tax liability. If you had a 0 tax liability, then you will not be able to use it. The credit can not be used to pay penalties on early withdraw from a retirement fund, but can cover the income tax paid on the funds.

us adoption tax credit

My husband and I adopted 2 awesome little boys through the state this year. Our caseworker just mentioned that we would be eligible for the adoption tax credit and child tax credit next year. Is there any way to estimate what our taxes/refund would be including these credits/deductions? I know the adoption credit is non-refundable, but I still wondered if it would help a lot.

My husband is salaried at $ 39,900, and I make about $ 6,000 (I work part time/seasonal so I can be with my special needs kiddos), plus we receive the state adoption subsidy of $ 348 a month per child. They also have after-school care, which this year will only add up to about $ 1200.

I tried using the Turbo Tax/HRBlock calculators, but they do not let you input for credits like the adoption one. I would love to have a general idea of what to expect next year.

Answer by Bostonian In MO
See IRS Pub 4903 http://www.irs.gov/pub/irs-pdf/p4903.pdf for information on the Adoption Tax Credit. This is the 2014 version but 2014 should be similar.

Because substantial amounts of money can be involved — into the low 5-figure region — the application procedures are complex and all are processed by hand. You must file a paper return by mail and processing time for the credit typically runs 6 months or more. Normally you will get 2 refunds when you apply for it, one refund of any excess tax withheld and most lower level credits and a later one for the Adoption Tax Credit. It’s definitely worth the wait as it can most or all of your out-of-pocket adoption costs and it’s refundable.

The Child Tax Credit is a non-refundable credit that reduces your tax by $ 1,000 per child who is under age 17 as of the end of the year. Any of the CTC that is unused *may* be recoverable by the refundable Additional Child Tax Credit. At your income level that would be unlikely as there would not be any unused CTC.

You might qualify for a small refundable EIC as well. At your income level it won’t be much.

Answer by Bash Limpbutt’s Oozing Cyst©
Even without the adoption credit, you’re looking at a refund of about $ 500 even if no federal income tax is withheld from your pay at all. I’d adjust your W-4s so that no more tax is withheld for the rest of 2014. The adoption credit could add thousands to your refund depending upon your expenses.

Answer by Bobbie
www.irs.gov and use the search box for Topic 607 Adoption Credit and Adoption.


Tax benefits for adoption include both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion for employer-provided adoption assistance. For tax years 1997 through 2013, the credit was nonrefundable. For 2014 and 2014, the credit was refundable. For tax year 2014, the credit has reverted to being nonrefundable, with a maximum amount (dollar limitation) of $ 12,650 per child.
Qualified adoption expenses

Form 8839 and instructions

To claim the credit or exclusion, complete Form 8839 (PDF), Qualified Adoption Expenses, and attach the form to your Form 1040 (PDF) or Form 1040NR (PDF).

There is no longer a requirement to attach the adoption documentation to 2014 returns. However, documentation must be kept as part of a taxpayer’s records.

The IRS encourages taxpayers to use tax preparation software to prepare their Forms 1040 and Forms 8839. However, instead of filing electronically, they must print and mail their completed forms to the IRS.

Use the search box at the www.irs.gov website for the 1040ES Estimated Tax for Individuals
Use this package to figure and pay your estimated tax.


Page 7 does have the 2014 Self-Employment Tax and Deduction Worksheet for Lines 1 and 11 of the Estimated Tax Worksheet for this purpose OK.
Page 9 has the 2014 Estimated Tax Worksheet and page 11 and 10 the payment voucher 1 through 4 and the due dates on each one for that purpose and time in your life.
Once you finish learning how to use the above information you can try to double check your self by using the below enclosed information.
Enter your filing status, income, deductions and credits and we will estimate your total taxes for 2014. Based on your projected withholdings for the year, we can also estimate your tax refund or amount you may owe the IRS next April 2014.
W-2 Box 1 ?????? wages earnings during the 2014 tax year Box 2 FIT $ amount withheld to be used as a TAX CREDIT during the 2014 tax filing season and when this amount would be MORE than your FIT liability IS at that time you MIGHT be able to qualify for a REFUND of some of that amount during the 2014 tax filing season for the 2014 FIT return.
Single taxpayer age 25 more than 6 months in the US.
Your federal taxes are estimated at $ ?????. Your outstanding tax bill $ ?????.
This is ???% of your total income of $ ?????. Your total tax payments and refundable credits for the year were $ ?. Your outstanding tax bill is estimated at $ ?????. Your income puts you in the ??% tax bracket.


Hope that you find the above enclosed information useful. 08/17/2013


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