Draft Instructions For Form 8839 - Qualified Adoption Expenses

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That violate state or federal law,

Child who is a U.S. citizen or resident. If the eligible child

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For carrying out a surrogate parenting arrangement,

is a U.S. citizen or resident, you can take the adoption credit

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For the adoption of your spouse’s child,

or exclusion even if the adoption never became final. Take

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Paid or reimbursed by your employer or any other person

the credit or exclusion as shown in the following tables.

or organization, or

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Allowed as a credit or deduction under any other provision

IF you pay

of federal income tax law.

qualifying expenses in...

THEN take the credit in...

Employer-Provided Adoption Benefits

Any year before the year the

The year after the year

adoption becomes final

of the payment.

In most cases, employer-provided adoption benefits are

amounts your employer paid directly to either you or a third

The year the adoption becomes

The year the adoption

final

becomes final.

party for qualified adoption expenses under a qualified

adoption assistance program. See Children with special

Any year after the year the adoption The year of the payment.

needs on this page. A qualified adoption assistance program

becomes final

is a separate written plan set up by an employer to provide

adoption assistance to its employees. For more details, see

IF your employer pays for

Pub. 15-B, Employer’s Tax Guide to Fringe Benefits.

qualifying expenses under an

THEN take the

Employer-provided adoption benefits should be shown in

adoption assistance program in... exclusion in....

box 12 of your Form(s) W-2 with code T. Your salary may

Any year

The year of the payment.

have been reduced to pay these benefits. You may also be

able to exclude amounts not shown in box 12 of your Form

W-2 if all of the following apply.

Children with special needs. If you adopt a child with

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You adopted a child with special needs. See the

special needs you may be able to claim or exclude up to

instructions for line 1, column (d), on page 3 for the

$13,170 (minus any qualified adoption expenses claimed for

definition of a child with special needs.

the same child in a prior year) in the year the adoption

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The adoption became final in 2010.

becomes final even if you or your employer did not pay any

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Your employer had a qualified adoption assistance

qualified adoption expenses. See the instructions for line 1,

program as described on page 2.

column (d), on page 3 for more information.

Who Can Take the Adoption Credit or

Foreign child. If the eligible child is not a U.S. citizen or

resident, you cannot take the adoption credit or exclusion

Exclude Employer-Provided Adoption

unless the adoption becomes final. Take the credit or

Benefits?

exclusion as shown on the following tables.

You may be able to take the credit or exclusion if all three of

IF you pay

the following statements are true.

qualifying expenses in...

THEN take the credit in...

1. Your filing status is single, head of household,

Any year before the year the

The year the adoption

qualifying widow(er), or married filing jointly. Generally, if

adoption becomes final

becomes final.

you are married, you must file a joint return to take the credit

or exclusion. However, if you are married and filing a

The year the adoption becomes

The year the adoption

separate return, you may be able to take the credit or

final

becomes final.

exclusion on a separate return if you are considered

Any year after the year the adoption The year of the payment.

unmarried because you are legally separated or living apart

becomes final

from your spouse and you meet certain other requirements.

See Married Persons Filing Separate Returns below.

2. Your modified AGI is less than $222,520 or you have

IF your employer pays for

a carryforward of an adoption credit from a prior year. To

qualifying expenses under an

THEN take the

figure your modified AGI, see the instructions for line 8 on

adoption assistance program in... exclusion in....

page 5 (for the credit) or line 22 on page 6 (for the

Any year before the year the

The year the adoption

exclusion).

adoption becomes final

becomes final.

3. You report the required information about the eligible

child in Part l.

The year the adoption becomes

The year the adoption

final

becomes final.

Married Persons Filing Separate Returns

Any year after the year the adoption The year of the payment.

becomes final

You may be able to take the credit or exclusion if all of the

following apply.

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Statements (2) and (3) above under Who Can Take the

If your employer makes adoption assistance payments in

Adoption Credit or Exclude Employer-Provided Adoption

a year before the adoption of a foreign child is final, you

Benefits are true.

must include the payments in your income in the year of the

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You lived apart from your spouse during the last 6 months

payment. Then, on your return for the year the adoption

of 2010.

becomes final, you can make an adjustment to take the

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The eligible child lived in your home more than half of

exclusion.

2010.

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You provided over half the cost of keeping up your home.

Your employer is not required to withhold income tax

on payments for qualifying expenses under an

When To Take the Credit or Exclusion

adoption assistance program. If you must include the

CAUTION

When you can take the adoption credit or exclusion depends

payments in income in the year paid because your adoption

on whether the eligible child is a citizen or resident of the

of a foreign child is not final, your withholding may not be

United States (including U.S. possessions) at the time the

enough to cover the tax on those payments. You may need

adoption effort begins.

to give your employer a new Form W-4 to adjust your

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Draft Instructions For Form 8839 - Qualified Adoption Expenses - 2010 Page 2

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