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Does anyone know about adoption subsidies & the adoption tax credit

We are preparing to adopt our foster daughter (mom is finishing relinquishment counseling and then in Nov her rights will be relinquished and we can adopt).

Anyway...she is a healthy baby, but she was exposed to drugs in uerto. Mom tested positive at birth but the hospital did not test the baby. She is developmentally on track.

She is a minority (1/2 hispanic) HOWEVER, birth father cannot be located to prove this fact, mom is cauc.

If she is Title IV-E eligible will this also make her "special needs" for the purposes of the adoption tax credit? She is currently a Title IV-E foster we are expecting that to continue for the adoption purposes.


Asked by hersheyb at 3:57 PM on Sep. 24, 2010 in Adoption

Level 3 (13 Credits)
This question is closed.
Answers (9)
  • I'm not sure about that. Maybe someone else will know. I have two who were adopted as newborns and exposed to drugs in utero. Since DS was born with drugs in his system, he qualified for a subsidized adoption and was considered "special needs" for that. I didn't claim that he was special needs for tax purposes, because they have criteria that must fit, and I didn't want to get audited, lol!

    The adoption tax credit is currently not fully refundable, which means that the amount you can get back depends on your total tax liability. I gave up my job to stay home with DD, and DH doesn't make a lot of money, so we haven't had hardly any income tax liability since she was born. I don't think we'll ever get the adoption tax credit for her adoption, since it expires after five years. We probably will get it for our son, though, since he is only two and I'll graduate and start working as an R.N. within 6 months.


    Answer by Iamgr8teful at 5:39 PM on Sep. 24, 2010

  • This link is directly to the IRS. The credit and amounts and way you can claim are changing annually. The latest claims you can get back everything in 1 year even if you don't owe enough taxes! If the child qualifies for IV-E or a subsidy, you can take the entire credit. We are adopting a minority sibling group which deems them special needs. We just negotiated our subsidy yesterday. If you want info or have specific questions feel free to PM me! :) Best wishes and congrats!! :)


    Answer by love2snorkel70 at 6:39 PM on Sep. 25, 2010

  • I don't know that it matters regarding the tax credit. We adopted a perfectly healthy caucasian 1 week old and received the FULL tax credit. As long as you make less than $180k/year gross you should get the full amount...

    lamgr8ful, are you sure of all this?? the less u make the more likely you should get you need help making this happen??

    Answer by coolchic320 at 9:26 PM on Sep. 24, 2010

  • Yes, unfortunately I am sure. I usually talk with the IRS several times while preparing taxes each year. With me as a SAHM/full-time student and DH's income being very low, we haven't owed any taxes. The refund is based on your actual tax liability. If you owe $1,000 in taxes in a given year and have $10,000 on your adoption tax credit, you would be refunded $1,000 that year, then have four more years to roll it over before it expires. Fortunately our first adoption cost very little (around $5,000), so it doesn't hurt too much that we won't see the refund. I'll be working soon and we should get the tax credit for our second adoption.

    Answer by Iamgr8teful at 11:33 PM on Sep. 24, 2010

  • Here is what I found...

    Answer by coolchic320 at 2:36 PM on Sep. 25, 2010

  • that's so interesting....we paid $23k (uuug) but got back $13,500 the next year NOT including our regular tax back...

    Answer by coolchic320 at 2:44 PM on Sep. 25, 2010

  • Love2snorkel70 and coolchic320, I did hear that the refund was being made fully refundable, which would mean that it would not depend on your tax liability. It was not that way when we adopted our first child six years ago ;-) I'm glad you posted the link. That will probably be very helpful to someone who needs the info now.

    Answer by Iamgr8teful at 3:07 PM on Sep. 26, 2010

  • I'm not sure what Title IVE means, but she should qualify for medical subsidies. Make sure it addresses medical care for anything related to being born drug addicted.

    Answer by motherofhope98 at 8:16 AM on Oct. 11, 2010

  • gl

    Answer by mekarevell at 12:25 AM on Oct. 12, 2010