2016 Instructions For Form 8839 (Page 5 of 8) in pdf

Exclusion of Prior Year Benefits Worksheet

Keep for Your Records

(for the adoption of a foreign child that became final in 2016)

1. Enter the total employer-provided adoption benefits you received in 2016 and all prior years for the adoption of

the foreign child . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Enter $13,460. If you and another person (other than your spouse if filing jointly) each received

employer-provided adoption benefits in 2016 or any prior year to adopt the same child, see the instructions for

line 2 at the end of this worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. Enter the smaller of line 1 or line 2 here and on Form 8839, line 17. If necessary, cross out the preprinted

amount on line 17 and enter the result above the preprinted amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enter -0- on Form 8839, line 18.

Enter the amount from line 3 of this worksheet on Form 8839, line 19.

On Form 8839, line 20, enter the total amount of employer-provided adoption benefits received in 2016 and

all prior years. On the dotted line next to line 20, enter “PYAB” and the total amount of benefits you received

before 2016.

Complete Form 8839 through line 28. Then, complete lines 4 through 9 of this worksheet to figure the amount

of any prior year benefits you can exclude and the taxable benefits, if any, to enter on Form 8839, line 29.

4. Is the amount on your 2016 Form 8839, line 28, less than the amount on Form 8839, line 21?

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

Yes. Subtract Form 8839, line 28 from line 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Enter the total employer-provided adoption benefits you received before 2016 included on Form 8839, line 20,

for all children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

on Form 8839, line 29. 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 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. Enter the total 2016 employer-provided adoption benefits included on Form 8839, line 20, for all children . . . . .

9. Prior year excluded benefits. Subtract line 8 of this worksheet from line 7. If zero or less, stop; you can't

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 of

this worksheet. Then, subtract the amount from line 9 of this worksheet 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 of this worksheet.

Line 2. The maximum amount of employer-provided adoption benefits that can be excluded from income is $13,460 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

$13,460 limit must be divided between the two of you. You can divide it in any way you both agree. Enter your share of the $13,460 limit on

line 2 of this worksheet.

child and the adoption became final in 2016, you can use the

Example. Brian and Susan paid qualified adoption expenses

total expenses you paid in 2016 and all prior years in

of $7,000 in 2013, $8,000 in 2014, and $9,000 in 2015 in

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

connection with the adoption of an eligible foreign child from

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

Country X. Country X is a non-Hague country (a country not

qualified adoption expenses to adopt the same child, the total

party to the Hague Adoption Convention). In 2015, Country X

qualified expenses must be divided between the two of you. You

issued a final decree of adoption to Brian and Susan, who

can divide it in any way you both agree.

brought the child to the United States on an IR2, IR3, or IR4 visa.

In 2016, Brian and Susan paid $1,000 in qualified adoption

If the adoption didn't become final by the end of 2016, you

expenses in connection with re-adopting the child in their home

can't take the adoption credit for that child in 2016.

state. Brian and Susan's modified gross income (MAGI) is less

In general, the year of finality of a foreign adoption is

than the MAGI limitation in all years.

determined either under Rev. Proc. 2005-31, I.R.B. 2005-31,

Under Rev. Proc. 2005-31, Brian and Susan may treat 2015

2005-26 1374, available at

(the year of the adoption in Country X) or 2016 (the year of

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(non-Hague adoptions) or under Rev. Proc. 2010-31,

re-adoption in the United States) as the year of finality. If Brian

2010-41 I.R.B. 413, available at

and Susan choose 2015, then the $24,000 of aggregate

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(Hague adoptions).

qualified adoption expenses paid in 2013, 2014, and 2015

Non-Hague adoptions. In most non-Hague adoptions, there

($7,000 plus $8,000 plus $9,000) will be treated as paid in 2015.

is an adoption proceeding in the foreign country (and the country

The credit will be limited to $13,400 (the dollar limitation for

isn't a party to the Hague Adoption Convention, discussed later)

2015).

before the child is allowed to come to the United States. There

Brian and Susan instead may choose to treat 2016 (the year

may also be a re-adoption proceeding in the United States,

of re-adoption in the United States) as the year of finality. If Brian

either in the same year as the foreign adoption or in a later year.

and Susan choose 2016, then the $25,000 of aggregate

Rev. Proc. 2005-31 generally allows taxpayers to choose as the

qualified adoption expenses paid ($24,000 total from 2013,

year of finality: (1) the year of the foreign-sending country

2014, and 2015, plus the $1,000 of re-adoption expenses paid in

adoption proceeding, or (2) the year of the re-adoption, if the

2016) will be treated as paid in 2016. The credit will be limited to

re-adoption occurs in either the first or second year following the

$13,460 (the dollar limitation for 2016).

year of the foreign-country proceeding. The expenses of

re-adoption are qualified adoption expenses in the year in which

Hague adoptions. In Hague adoptions, there is usually an

the expenses are paid, subject to the dollar limitation.

adoption proceeding in the sending country (and the country is

-5-

Form 8839 (2016)

2016 Instructions For Form 8839 Page 5

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