taxmap/instr2/i8839-000.htm#TXMP7d5c6947
Qualified Adoption Expenses
2010 taxmap/instr2/i8839-000.htm#TXMP6fd7d171If 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.
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.
taxmap/instr2/i8839-000.htm#TXMP201fbcceTo 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.
taxmap/instr2/i8839-000.htm#TXMP5f3fe19dBecause 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.
taxmap/instr2/i8839-000.htm#TXMP541db2a5taxmap/instr2/i8839-000.htm#TXMP2b84dd8aUse 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.
taxmap/instr2/i8839-000.htm#TXMP26d7462eUse 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.
- You paid qualified adoption expenses in:
- 2009 and the adoption was not final at the end of 2009,
or
- 2010 and the adoption became final in or before 2010.
- 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.)
- You paid qualified adoption expenses in connection with the
adoption of an eligible foreign child in:
- 2010 or prior years and the adoption became final in 2010,
or
- 2010 and the adoption became final before 2010.
See the instructions for line 1, column (e), on page 6.
- You have a carryforward of an adoption credit from a prior
year.
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.
- 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.
- You adopted a child with special needs and the adoption became
final in 2010.
- You received employer-provided adoption benefits in connection
with the adoption of an eligible foreign child in:
- 2010 or prior years and the adoption became final in 2010,
or
- 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.
 | 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.
|
taxmap/instr2/i8839-000.htm#TXMP07b87b11Any 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.
- Temporary Assistance for Needy Families (TANF).
- Medicaid and supplemental security income (SSI).
- Supplemental Nutrition Assistance Program (food stamps) and
low-income housing.
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