Draft Instructions For Form 8839 - Qualified Adoption Expenses

2010

Department of the Treasury

Internal Revenue Service

Instructions for Form 8839

Qualified Adoption Expenses

Income exclusion for employer-provided adoption

What’s New

benefits. Use Form 8839, Part III, to figure the

employer-provided adoption benefits you can exclude from

Expanded adoption credit. The Patient Protection and

your income on Form 1040, line 7, or Form 1040NR, line 8.

Affordable Care Act of 2010 made the adoption credit

You may be able to exclude these benefits from income if

refundable, meaning that you may claim it even if you owe

your employer had a qualified adoption assistance program

no tax. The Act also raised the maximum credit to $13,170

(see Employer-Provided Adoption Benefits on page 2) and

per eligible child. This amount begins to phase out if you

any of the following statements are true.

have modified adjusted gross income in excess of $182,520

and is completely phased out for modified adjusted gross

1. You received employer-provided adoption benefits in

income of $222,520 or more.

2010. However, special rules apply for benefits received in

connection with the adoption of an eligible foreign child. See

New documentation requirements. In addition to

the instructions for line 1, column (e), on page 4.

completing and filing Form 8839, you must include with your

2. You adopted a child with special needs and the

2010 tax return one or more adoption-related documents to

adoption became final in 2010.

support the credit you claim for each eligible child claimed

3. You received employer-provided adoption benefits in

on Form 8839. The requirements vary depending on

connection with the adoption of an eligible foreign child in:

whether or not the adoption has been finalized and whether

a. 2010 or prior years and the adoption became final in

the child has special needs. See the instructions for line 1

2010, or

for the specific requirements for each child claimed.

b. 2010 and the adoption became final before 2010.

Paper filing required. Because of the new documentation

See the instructions for line 1, column (e), on page 4.

requirements, if you are filing Form 8839 to claim the

You must complete Form 8839, Part III, before you can

adoption credit or to exclude from income any

figure the credit, if any, in Part II.

employer-provided adoption benefits, you cannot file your

income tax return and Form 8839 electronically. You must

You cannot exclude employer-provided adoption

file paper returns.

benefits if your employer is an S corporation in which

you own more than 2% of the stock or stock with

General Instructions

CAUTION

more than 2% of the voting power.

Definitions

Purpose of Form

Use Form 8839 to figure your adoption credit and any

Eligible Child

employer-provided adoption benefits you can exclude from

An eligible child is:

your income. You can claim the credit, the exclusion from

•

Any child under age 18. If the child turned 18 during the

income, or a combination of the two, up to $13,170 for

year, the child is an eligible child for the part of the year he

expenses of adopting an eligible child. For example, you can

or she was under age 18.

claim a credit of $6,000 and also exclude $7,170 from your

•

Any disabled person physically or mentally unable to take

income for a total benefit of $13,170. But, you cannot claim

care of himself or herself.

both a credit and an exclusion for the same expenses.

If you and another person (other than your spouse if

Adoption credit. Use Form 8839, Part II, to figure the

filing jointly) adopted or tried to adopt an eligible

adoption credit you can take on Form 1040, line 71,

child, see the instructions for line 2 on page 5

checkbox b or Form 1040NR, line 66, checkbox b. You may

CAUTION

(or line 15 beginning on page 5, if applicable) before

be able to take this credit in 2010 if any of the following

completing Part II (or Part III).

statements are true.

1. You paid qualified adoption expenses in:

Qualified Adoption Expenses

a. 2009 and the adoption was not final at the end of

Qualified adoption expenses are reasonable and necessary

2009, or

expenses directly related to, and for the principal purpose of,

b. 2010 and the adoption became final in or before 2010.

the legal adoption of an eligible child.

2. You adopted a child with special needs and the

Qualified adoption expenses include:

adoption became final in 2010. (In this case, you may be

•

Adoption fees,

able to take the credit even if you did not pay any qualified

•

Attorney fees,

adoption expenses.)

•

Court costs,

3. You paid qualified adoption expenses in connection

•

Travel expenses (including meals and lodging) while

with the adoption of an eligible foreign child in:

away from home, and

a. 2010 or prior years and the adoption became final in

•

Re-adoption expenses relating to the adoption of a foreign

2010, or

child.

b. 2010 and the adoption became final before 2010.

See the instructions for line 1, column (e), on page 4.

Qualified adoption expenses do not include expenses:

•

4. You have a carryforward of an adoption credit from a

For which you received funds under any state, local, or

prior year.

federal program,

Cat. No. 23077T

Draft Instructions For Form 8839 - Qualified Adoption Expenses - 2010

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