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taxmap/instr2/i8839-000.htm#TXMP7d5c6947

Instructions for Form 8839

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Qualified Adoption Expenses


2010
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Note.(p1)
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If additional information with respect to Form 8839 develops later in the filing season, the IRS will make that information available at www.irs.gov/form8839.
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What's New(p1)

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Expanded adoption credit.(p1)
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The adoption credit is now refundable, meaning that you may be able to claim it even if you owe no tax, for qualified adoption expenses that first became allowable in 2010 and for adoptions finalized in 2010. Adoption credit carryforwards from 2005 through 2009 also are refundable in 2010. See Notice 2010-66, 2010-42 I.R.B. 437, available at www.irs.gov/irb/2010-42_IRB/ar09.html.
Previously, the adoption credit was nonrefundable, meaning that it only could be used to reduce your tax liability, but credit amounts in excess of tax liability could be carried forward for up to 5 subsequent years.
The maximum credit and the exclusion for employer-provided benefits have each increased to $13,170 per eligible child. This amount begins to phase out if you have modified adjusted gross income in excess of $182,520 and is completely phased out for modified adjusted gross income of $222,520 or more.
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New documentation requirements.(p1)
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To claim the refundable adoption credit, you must complete and attach Form 8839 to your income tax return. Additionally, you must include one or more adoption-related documents to support your claim for the credit. Documentation must be provided for each eligible child claimed on Form 8839 and is required whether the credit is claimed for a 2010 adoption (or adoption attempt) or for a credit carryforward from a previous adoption (or adoption attempt). The documentation required varies, depending on whether the adoption has been finalized and whether the child has special needs. See the instructions for line 1 for the specific requirements for each child claimed.
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Paper filing required.(p1)
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Because of the new documentation requirements, if you are filing Form 8839 to claim the adoption credit or to exclude from income any employer-provided adoption benefits, you cannot file your income tax return and Form 8839 electronically. You must file paper returns. Mail your return with Form 8839 and all required documentation to the address listed in your tax return instructions.
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General Instructions(p1)

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Purpose of Form(p1)

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Use Form 8839 to figure your adoption credit and any employer-provided adoption benefits you can exclude from your income. You can claim both the exclusion and the credit for expenses of adopting an eligible child. For example, depending on the cost of the adoption, you may be able to exclude up to $13,170 from your income and also be able to claim a credit of up to $13,170. But, you cannot claim both a credit and exclusion for the same expenses. See Qualified Adoption Expenses and Employer-Provided Adoption Benefits on page 2.
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Adoption credit.(p1)
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Use Form 8839, Part II, to figure the adoption credit you can take on Form 1040, line 71, checkbox b or Form 1040NR, line 66, checkbox b. You may be able to take this credit in 2010 if any of the following statements are true.
  1. You paid qualified adoption expenses in:
    1. 2009 and the adoption was not final at the end of 2009, or
    2. 2010 and the adoption became final in or before 2010.
  2. You adopted a child with special needs and the adoption became final in 2010. (In this case, you may be able to take the credit even if you did not pay any qualified adoption expenses.)
  3. You paid qualified adoption expenses in connection with the adoption of an eligible foreign child in:
    1. 2010 or prior years and the adoption became final in 2010, or
    2. 2010 and the adoption became final before 2010. 
      See the instructions for line 1, column (e), on page 6.
  4. You have a carryforward of an adoption credit from a prior year.
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Income exclusion for employer-provided adoption benefits.(p1)
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Use Form 8839, Part III, to figure the employer-provided adoption benefits you can exclude from your income on Form 1040, line 7, or Form 1040NR, line 8. You may be able to exclude these benefits from income if your employer had a qualified adoption assistance program (see Employer-Provided Adoption Benefits on page 2) and any of the following statements are true.
  1. You received employer-provided adoption benefits in 2010. However, special rules apply for benefits received in connection with the adoption of an eligible foreign child. See the instructions for line 1, column (e), on page 6.
  2. You adopted a child with special needs and the adoption became final in 2010.
  3. You received employer-provided adoption benefits in connection with the adoption of an eligible foreign child in:
    1. 2010 or prior years and the adoption became final in 2010, or
    2. 2010 and the adoption became final before 2010. 
      See the instructions for line 1, column (e), on page 6.
For purposes of calculating the adoption credit in Part II, qualified adoption expenses (defined on page 2) do not include expenses reimbursed by an employer under a qualified adoption assistance program (defined on page 2). For this reason, you must complete Form 8839, Part III, before you can figure the credit, if any, in Part II.
caution
You cannot exclude employer-provided adoption benefits if your employer is an S corporation in which you own more than 2% of the stock or stock with more than 2% of the voting power.
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Note on welfare benefits and the adoption credit.(p1)
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Any refund you receive as a result of taking the adoption credit will not be used to determine if you are eligible for the following programs or how much you can receive from them. But if the refund you receive because of the adoption credit is not spent within a certain period of time, it can count as an asset (or resource) and affect your eligibility.