Expanded Adoption Credit. The adoption credit is now a refundable credit, meaning that the credit can be claimed even if the taxpayer owes no tax, for qualified adoption expenses that first became allowable in 2010 and for adoptions finalized in 2010. Adoption credit carryovers from 2005 through 2009 are also refundable in 2010.
Taxpayers who adopt a child with *special needs can qualify for the maximum credit even if no expenses were paid. In the year that an adoption of a child with special needs is final, the maximum credit and exclusions (subject to phase out) are allowed even if the taxpayer has no qualifying expenses.
*A child with special needs is defined as a U.S. citizen or resident determined by a state to be unlikely to be adopted unless adoption assistance is provided due to a child's age, ethnic background, medical condition, membership in a minority or sibling group, etc.
For more information on the Adoption Credit, click here.
To access Form 8839 - Qualified Adoption Expenses, from the Main Menu of the tax return (Form 1040) select:
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Adoption Credit - 8839