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Adoption Tax Credit

Adoption Tax Credit
Article from NACAC

IRS has confirmed that 2005–2007 tax returns may be amended to claim the adoption tax credit. Typically, the IRS does not permit amendments of tax returns older than three years to claim a refund for a credit. These are considered closed tax years. For the adoption tax credit, however, the IRS has now confirmed that people can amend returns from closed tax years in order to establish the adoption tax credit. Taxpayers cannot get a refund for any credit they were due to be in paid in these closed years, and must deduct any amount they would have received from the amount to be carried forward. They can carry over any remaining unused credit to 2008, 2009, and 2010. And, of course, in 2010 the credit is refundable so any remaining credit should be due to the taxpayer. (Adoptions before 2005 cannot be carried to 2010.) We’ve heard from a few parents who adopted in 2005 and 2006, and were turned down for these older amendments. If that happens to you, you should appeal right away. We have drafted some sample language parents can use in the appeal.

Families who adopted in other years have also been contacting us because they received a letter from the IRS denying the credit and assessing a penalty for improperly claiming a refund. In many cases, the denial was due to the examiner not accepting the adoption subsidy agreement as documentation, even though this is acceptable documentation of special needs. If you have been turned down improperly, we can often help resolve this issue.

If you are improperly denied the credit or need help with a closed tax year appeal, please contact us at If you are just waiting, we encourage patience. Unfortunately there isn’t anything we can do to speed up the process.

We encourage everyone to continue to spread the word that most people who adopted from 2005 to 2010 can still claim the adoption tax credit, if they have not done so already. Many people are still not aware of this, especially if they adopted from 2005 to 2007.

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