Draft Instructions For Form 8839 - Qualified Adoption Expenses

Exclusion of Prior Year Benefits Worksheet

(for the adoption of a foreign child that became final in 2010)

Keep for Your Records

1. Enter the total employer-provided adoption benefits you received in 2010 and all prior years for the

adoption of the foreign child . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Enter $13,170. If you and another person (other than your spouse if filing jointly) each received

employer-provided adoption benefits in 2010 or any prior year to adopt the same child, see instructions

below. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. Enter the smaller of line 1 or line 2 here and on Form 8839, line 15. If necessary, cross out the preprinted

amount on line 15 and enter the result above the preprinted amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

•

Enter -0- on Form 8839, line 16.

•

Enter the amount from line 3 above on Form 8839, line 17.

•

On Form 8839, line 18, enter the total amount of employer-provided adoption benefits received in 2010

and all prior years. On the dotted line next to line 18, enter “PYAB” and the total amount of benefits you

received before 2010.

•

Complete Form 8839 through line 26. Then, complete lines 4 through 9 below to figure the amount of any

prior year benefits you can exclude and the taxable benefits, if any, to enter on Form 8839, line 27.

4. Is the amount on your 2010 Form 8839, line 26, less than the amount on Form 8839, line 19?

No. Skip lines 4 through 6 and go to line 7.

Yes. Subtract Form 8839, line 26 from line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Enter the total employer-provided adoption benefits you received before 2010 included on Form 8839, line

18, for all children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. Taxable benefits. Subtract line 5 from line 4. If zero or less, enter -0-. Enter the result here and on Form

8839, line 27. If more than zero, also include this amount on line 7 of Form 1040 or line 8 of Form 1040NR,

and enter “AB” on the dotted line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. Enter the amount from Form 8839, line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. Enter the total 2010 employer-provided adoption benefits included on Form 8839, line 18, for all children . . .

9. Prior year excluded benefits. Subtract line 8 from line 7. If zero or less, stop; you cannot exclude any of

your prior year benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Next. Figure the total you would enter on line 7 of Form 1040 or line 8 of Form 1040NR before you exclude the amount from

line 9 above. Then, subtract the amount from line 9 above from that total. Enter the result on line 7 of Form 1040 or line 8 of

Form 1040NR. On the dotted line next to the line for wages, enter “PYAB” and the amount from line 9 above.

Worksheet Instructions

Line 2. The maximum amount of employer-provided adoption benefits that can be excluded from income is $13,170 per child. If you and

another person (other than your spouse if filing jointly) each received employer-provided adoption benefits to adopt the same child, the

$13,170 limit must be divided between the two of you. You can divide it in any way you both agree. Enter your share of the $13,170 limit on

line 2 of the worksheet above.

You may be able to claim a credit or exclusion for the

the total qualified expenses must be divided between the

adoption of a child with special needs even if you did not

two of you. You can divide it in any way you both agree.

pay any qualified adoption expenses. See line 20 and the

If the adoption did not become final by the end of 2010,

instructions for line 5.

you cannot take the adoption credit for that child in 2010. If

If you check the box in column (d) indicating the child

the adoption becomes final in a later year, you may be able

has special needs, be sure to attach a copy of the

to take a credit for the expenses in that year.

state’s determination to Form 8839.

CAUTION

To find out when a foreign adoption is treated as final,

Column (e)

see Rev. Proc. 2005-31, 2005-26 I.R.B. 1374, available at

A child is a foreign child if he or she was not a citizen or

resident of the United States or its possessions at the time

The Hague Convention on Protection of Children and

the adoption process began.

Co-operation in Respect of Intercountry Adoption

Special rules. If you paid qualified adoption expenses in

(Hague Adoption Convention) entered into force for

CAUTION

2010 or any prior year in connection with the adoption of a

the United States on April 1, 2008. The Hague Adoption

foreign child and the adoption became final in 2010, you can

Convention applies if you adopted a child from a country

use the total expenses you paid in 2010 and all prior years

that is party to the Hague Adoption Convention and you filed

in determining the amount to enter on line 5. If you and

your application and petition (Forms I-800A and I-800) with

another person (other than your spouse if filing jointly) each

the U.S. Citizenship and Immigration Service after March

paid qualified adoption expenses to adopt the same child,

31, 2008. See

for more information

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Draft Instructions For Form 8839 - Qualified Adoption Expenses - 2010 Page 4

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