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

Question

Does anyone know? I've heard I get to claim the whole 10K and I dont have to have documentation. Is that true. Does anyont have any experience with this?

Answer 1

You are basically correct. If you adopted a special needs child in 2006 and the adoption became final in 2006, you can take the full credit of $10,960. Your expenses do not have to total $10,960.

You can carry forward unused credit to future years.

The documentation needed is that you must have evidence from the state that the child meets citizenship or residence requirements, the child should not or cannot be returned to his parents' home, and that the child will not be adopted unless assistance is provided to the adoptive parents.

See the following publication for further details and income restrictions.

http://www.irs.gov/pub/irs-pdf/i8839.pdf

Answer 2

Congratulations on your adoption!

For both the credit or the exclusion, qualifying expenses include 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 for which the principal purpose is the legal adoption of an eligible child. An eligible child must be under 18 years old, or be physically or mentally incapable of caring for himself or herself. The adoption credit or exclusion cannot be taken for a child who is not a United States citizen or resident unless the adoption becomes final. An eligible child is also a child with special needs if he or she is a United States citizen or resident and a state determines that the child cannot or should not be returned to his or her parent's home and probably will not be adopted unless assistance is provided. Under certain circumstances, the amount of your qualified adoption expenses may be increased if you adopted an eligible child with special needs.

I think you have to have documentation of what you spent.

You only get a credit for what you spent, up to $10,000. It's not an automatic $10,000.

Answer 3

http://www.irs.gov/taxtopics/tc607.html

http://www.irs.gov/instructions/i8839/ch01.html