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Instructions for Form 8839
taxmap/instr2/i8839-002.htm#TXMP63b8e9a2

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Definitions(p2)

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Eligible Child(p2)

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An eligible child is:
caution
If you and another person (other than your spouse if filing jointly) adopted or tried to adopt an eligible U.S. child, see the instructions for line 2 (or line 13, if applicable), later, before completing Part II (or Part III).
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Qualified Adoption Expenses(p2)

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Qualified adoption expenses are reasonable and necessary expenses directly related to, and for the principal purpose of, the legal adoption of an eligible child.
Qualified adoption expenses include:
Qualified adoption expenses do not include expenses:
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Employer-Provided Adoption Benefits(p2)

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In most cases, employer-provided adoption benefits are amounts your employer paid directly to either you or a third party for qualified adoption expenses under a qualified adoption assistance program. But see Children with special needs, later. A qualified adoption assistance program is a separate written plan set up by an employer to provide adoption assistance to its employees. For more details, see Pub. 15-B, Employer's Tax Guide to Fringe Benefits.
Employer-provided adoption benefits should be shown in box 12 of your Form(s) W-2 with code T. Your salary may have been reduced to pay these benefits. You may also be able to exclude amounts not shown in box 12 of your Form W-2 if all of the following apply.
The following examples help illustrate how qualified adoption expenses and employer-provided adoption benefits apply to the maximum adoption credit allowed.

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Example 1.(p2)

Madelyn paid $10,000 in qualified adoption expenses for the adoption of an eligible child. Under a qualified adoption assistance program, Madelyn's employer reimbursed her for $4,000 of those expenses. Madelyn may exclude the $4,000 reimbursement from her income. However, because of the employer reimbursement, $4,000 of her expenses no longer meet the definition of qualified adoption expenses. As a result, Madelyn's maximum adoption credit is limited to $6,000 ($10,000 – $4,000).

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Example 2.(p2)

Haylee paid $10,000 in qualified adoption expenses for the adoption of an eligible child. Under a qualified adoption assistance program, Haylee's employer paid an additional $6,000 of qualified adoption expenses on her behalf. Her total qualified adoption expenses are $16,000 ($10,000 + $6,000). Because the expenses paid by Haylee were different from the expenses paid by her employer, Haylee may exclude the $6,000 that her employer paid from her income and may claim a credit for the $10,000 of qualified adoption expenses she paid.

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Example 3.(p2)

Paul paid $30,000 in qualified adoption expenses to adopt an eligible foreign child, and the adoption became final in 2011. Under a qualified adoption assistance program, Paul's employer reimbursed him for $13,360 of those expenses. Paul may exclude the $13,360 reimbursement from his income. The remaining $16,640 of expenses ($30,000 – $13,360) continue to be qualified adoption expenses that are eligible for the credit. However, Paul's credit is dollar-limited to $13,360. The remaining $3,280 ($30,000 – $13,360 – $13,360) may never be claimed as a credit or excluded from gross income.