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Do you have to pay for failed adoption expenses before you can claim them on taxes, and when can you do that?

Forum|Forum|6 years ago
June 1, 2019
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I have an invoice from the lawyer for this year. He said he was fine holding until we could claim the adoption credit since we didn't really expect to have this much expense in one year.

As I read about filing failed adoption attempts, it seems you have to have an adoption expense first, so my question is, do we need to go ahead and pay him now instead of waiting a couple years when trying to claim the credit?

Ideally I would love to wait until next year or year after and claim the credit and then use that money to pay the lawyer fee, but I'm not sure how that works.

And from what I've read, failed adoptions, you have to wait a year, so if we do pay this year in 2016. We couldn't file in January 2017, but would instead have to wait until January 2018. Is that right? If so, that is a financial hardship for many trying to adopt so I want to make sure I understand this properly.

Best answer by bwa

Adoption expenses are deductible in the earlier of the year the adoption becomes final, or the year after they are paid. For a failed adoption, that would be the year after they are paid. Consequently, if you pay them in 2016 they would be eligible for credit in 2017 (which, at the earliest, you would claim on your 2017 return filed in January 2018..

(An exception is for a foreign adoption, where for a failed adoption, they are not eligible for a credit at any time.)

B

bwaAnswer

Adoption expenses are deductible in the earlier of the year the adoption becomes final, or the year after they are paid. For a failed adoption, that would be the year after they are paid. Consequently, if you pay them in 2016 they would be eligible for credit in 2017 (which, at the earliest, you would claim on your 2017 return filed in January 2018..

(An exception is for a foreign adoption, where for a failed adoption, they are not eligible for a credit at any time.)

M

mijesus1996Author

Thanks, there seems to be confusion around adoption expense. For example, if my lawyer is content waiting until I can claim the credit when I file in Jan 2018, is it sufficient that I have an "expense/invoice" that is unpaid as documentation for taxes? I think it is, but can someone help me find this in the tax code/worksheets for the adoption credit so I understand this better? I'm trying to figure out if I "have" to pay the invoice here in 2016, or can I just wait and pay it in 2018 as I claim the credit?