How to Complete IRS Form 8839 for Foster Care Adoptions?

• Posted by paul bryant March 17, 2023 - Filed in Business - #IRS form 8839  - 612 views

  Introduction

  Adopting a child can be a long and challenging process, but it is also one of the most rewarding experiences a person or a couple can have. The IRS recognizes that the cost of adoption can be significant, and as such, they offer tax credits to help offset some of the expenses. One of the forms that taxpayers can use to claim the credit is Form 8839, which is used to report qualified adoption expenses. In this article, we will discuss the purpose of Form 8839, the types of expenses that qualify, and how to fill out the form correctly.

  What is Form 8839?

  Form 8839, Qualified Adoption Expenses, is a tax form that taxpayers can use to claim a credit for adoption expenses. The credit can be claimed by individuals who have adopted a child or who have attempted to adopt a child. The credit is non-refundable, which means that it can reduce the amount of taxes owed but cannot be used to generate a refund. The credit is also subject to income limits, which means that taxpayers with higher incomes may not be eligible for the full credit.

  What expenses qualify for the credit?

  The IRS allows taxpayers to claim a credit for certain expenses related to the adoption of a child. The expenses that qualify for the credit include:

  Adoption fees: These are fees that are paid to an adoption agency or an attorney to facilitate the adoption process.

  Court costs: These are fees that are paid to the court for legal proceedings related to the adoption.

  Travel expenses: These are expenses that are incurred for travel related to the adoption, including transportation, lodging, and meals.

  Immigration fees: These are fees that are paid to the U.S. Citizenship and Immigration Services for the adoption of a child from another country.

  Other expenses: These may include medical expenses related to the child, counseling fees, and other expenses that are directly related to the adoption.

  It is important to note that the expenses must be directly related to the adoption of a child, and they must be reasonable and necessary. Expenses that are not directly related to the adoption, such as expenses related to the care of the child after the adoption is finalized, do not qualify for the credit.

  How to fill out Form 8839?

  To claim the credit for adoption expenses, taxpayers must fill out IRS Form 8839 and attach it to their tax return. The form has several sections that need to be completed:

  Part I: Taxpayer Information – This section requires the taxpayer's name, address, and social security number.

  Part II: Adoption Information – This section requires information about the child who was adopted, including their name, date of birth, and social security number.

  Part III: Expenses – This section requires taxpayers to list the expenses that qualify for the credit and to provide documentation to support the expenses.

  Part IV: Credit for Adoption Expenses – This section calculates the credit based on the expenses listed in Part III.

  Part V: Carryforward of Adoption Credit – This section is used to carry forward any unused credit to future tax years.

  Conclusion

  Form 8839 is an important tax form for taxpayers who have adopted a child or who have attempted to adopt a child. The credit for adoption expenses can help offset some of the costs associated with adoption, making it more accessible for families who want to expand their family through adoption.

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