Ask AF: Can We Claim Tax Credit for Failed Adoptions?

Failed adoptions can be both emotionally and financially taxing. Here's what you need to know about claiming tax credit for a failed adoption.

Q: My wife and I have been attempting to adopt for about two years. I have heard that you can claim the Adoption Tax Credit for a failed adoption. Can you do this under the new, permanent credit? If so, how do you claim it, and when?

A: Yes, you can claim the credit for a failed adoption. Nothing’s changed in that regard.

Documentation doesn’t need to be complicated. If I’m working with a couple who take steps toward an adoption that is not successful, I generally give them a letter saying, “I represent this couple as their attorney. They were working with [birth mother’s name] and they lost [amount of money].”

When to claim is a separate issue. In a failed adoption, of course, there is no finalization. My position is that the equivalent of finalization is when the adoption fails, so you can take the credit in that year. If you follow the IRS instructions to the letter, you claim the year after the expenses were incurred. If you do this, you can adjust your withholding to get immediate use of the money.

IRS instructions also state that, if you take a credit for a failed adoption, and later adopt successfully, you have to offset the credit. But nothing in the statutes or in legislative history supports this. Each adoption or failed adoption involves a different child, so you can take a separate credit for each. Every time my clients have fought the IRS on this matter, they’ve won.




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Adoption Attorneys

Sogand Zamani, Zamani & Associates
Sogand Zamani
Washington, DC
DC, MD
Jennifer Fairfax, Family Formation Law Offices
Jennifer Fairfax
Silver Spring, MD
DC, MD, VA
DC, MD, VA
King, Spry, Herman, Freund, Faul, LLC
Dorota Gasienica-Kozak, Esq.
Bethlehem, PA
NJ, PA
TruAdopt Law
Celeste E. Liversidge
Pasadena, CA
U.S. Newborn
CA
Horn Law Group, LLC
Margaret Moriarty
Toms River, NJ
U.S. Newborn, U.S. Foster
NJ
Michael S. Goldstein, Esq., LCSW
Rye Brook, NY
U.S. Newborn, U.S. Foster, International
FL, NJ, NY
Lisa L. Collins, Esq.
Nashville, TN
U.S. Newborn, U.S. Foster, International, Special Needs/Waiting Child
TN
Herrin & Leach, LLC
Nathan Leach
Indianapolis, IN
U.S. Newborn, U.S. Foster
IN
GoransonBain, PLLC
Dallas, TX
TX
Shelley B. Ballard, PC
Chicago, IL
U.S. Newborn, U.S. Foster, International, Special Needs/Waiting Child
IL
Messerli Kramer
Gary A. Debele
Minneapolis, MN
U.S. Newborn, U.S. Foster, International, Special Needs/Waiting Child
MN, WI
Kirsh & Kirsh, P.C.
Steven M Kirsh
Indianapolis, IN
IN
Law Office of Jennifer R. Cochran-Green
Austin, TX
U.S. Newborn, U.S. Foster
TX
Gillespie Law Group, LLC
Genie Miller Gillespie
Chicago, IL
U.S. Newborn, U.S. Foster, International, Special Needs/Waiting Child
IL
Adoption Law Center of Middle TN, PLLC
Jenny Hall
Nashville, TN
U.S. Newborn, U.S. Foster, International, Special Needs/Waiting Child
TN
Fiddler Osband LLC
Rachel Osband
Edina, MN
U.S. Newborn, U.S. Foster, International, Special Needs/Waiting Child
MN
Adoption Legal Services of Oklahoma
Charles Watts
Oklahoma City, OK
U.S. Newborn, U.S. Foster
OK
Jenny L. Womack, P.C.
Dallas, TX
U.S. Newborn, U.S. Foster
TX
C.J. Lyford
Lafayette Hill, PA
U.S. Newborn, U.S. Foster, International, Special Needs/Waiting Child
PA
Solberg & Bullock, LLC
Ellyn J. Bullock
Champaign, IL
U.S. Newborn, U.S. Foster, International, Special Needs/Waiting Child
IL

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