Part II - Adoption Credit Line 2

The maximum adoption credit is $10,000 per child. If you and another person each paid qualified adoption expenses to adopt the same child, the $10,000 limit must be divided between the two of you. You may divide it in any way you both agree. If the other person is your spouse and you are filing a joint return, this rule does not apply. Cross out the preprinted entry on line 2 and enter above line 2 your share of the $10,000 limit for that child.

Line 3

Did you file Form 8839 for a prior year in connection with the adoption of the same child?

No.	Enter zero on line 3.
Yes.	If you filed a 1998, 1999, 2000, or 2001 Form 8839, enter the total of the amounts shown for the child on lines 3 and 6 of the last form you filed. Otherwise, enter the amount shown for the child on line 4 of your 1997 Form 8839.

Line 5

Special rules apply if you paid expenses in connection with the adoption of an eligible foreign child. See the instructions for line 1, column (e), for details.

If the adoption became final before 2002, enter your qualified adoption expenses from 2002 on line 5. Otherwise, complete the following worksheet to figure the amount, if any, to enter on line 5.

Qualified Adoption Expenses Worksheet - Line 5 (keep for your records)

1.	Enter the amount from Form 8839, line 4	1.
2.	Did the adoption become final in 2002?
	No. Enter -0-.
	Yes. Enter your qualified adoption expenses from 2002	2.
3.	Is line 2 smaller than line 1?
	No. Stop; enter the amount from line 2 on Form 8839, line 5.
	Yes. Subtract line 2 from line 1	3.
4.	Enter $5,000 ($6,000 for a child with special needs).	4.
5.	Enter your qualified adoption expenses from 2001	5.
6.	Enter the smallest of line 3, line 4, or line 5	6.
7.	Add lines 2 and 6. Enter the result here and on Form 8839, line 5	7.

Line 8

Use the following chart to find your modified adjusted gross income to enter on line 8.

IF you file. . .	THEN enter on line 8 the amount from. . .
Form 1040	Form 1040, line 36, increased by the total of any: Exclusion of income from Puerto Rico and Amount from Form 2555, lines 43 and 48. Form 2555-EZ, line 18. Form 4563, line 15.
Form 1040A	Form 1040A, line 22

Line 13

If you completed the Credit Carryforward Worksheet in your 2001 Form 8839 instructions, enter the amount from line 18 of that worksheet.

Line 18 - Credit Carryforward to 2003

If line 17 of Form 8839 is smaller than line 14, you may have an unused credit to carry forward to the next 5 years or until used, whichever comes first. Use the worksheet that follows to figure the amount of your credit carryforward. If you have any unused credit to carry forward to 2003, be sure you keep the worksheet. You will need it to figure your credit for 2003.

Credit Carryforward Worksheet (keep for your records)

1.	Enter the amount from Form 8839, line 12	1.
	Did you use the Credit Carryforward Worksheet in the 2001 Form 8839 instructions?
	No. Enter the amount from line 1 above on line 7. Leave lines 2 through 6 blank.
	Yes. Have that worksheet handy and go to line 2.
2.	Enter any credit carryforward from 1997 (line 9 of your 2001 worksheet)	2.
3.	Enter any credit carryforward from 1998 (line 11 of your 2001 worksheet)	3.
4.	Enter any credit carryforward from 1999 (line 13 of your 2001 worksheet)	4.
5.	Enter any credit carryforward from 2000 (line 15 of your 2001 worksheet)	5.
6.	Enter any credit carryforward from 2001 (line 17 of your 2001 worksheet)	6.
7.	Add lines 1 through 6	7.
8.	Enter the amount from Form 8839, line 18	8.
9.	Subtract line 8 from line 7	9.
	Did you enter an amount on line 2, 3, 4, 5, or 6 above?
	No. Stop; enter the amount from line 9 on lines 20 and 23; leave all the other lines blank. Yes. Go to line 10.
10.	Subtract line 8 from line 2. If zero or less, enter -0-	10.
11.	Subtract line 2 from line 8. If zero or less, enter -0-	11.
12.	1998 credit carryforward to 2003. Subtract line 11 from line 3. If zero or less, enter -0-	12.
13.	Subtract line 3 from line 11. If zero or less, enter -0-	13.
14.	1999 credit carryforward to 2003. Subtract line 13 from line 4. If zero or less, enter -0-	14.
15.	Subtract line 4 from line 13. If zero or less, enter -0-	15.
16.	2000 credit carryforward to 2003. Subtract line 15 from line 5. If zero or less, enter -0-	16.
17.	Subtract line 5 from line 15. If zero or less, enter -0-	17.
18.	2001 credit carryforward to 2003. Subtract line 17 from line 6. If zero or less, enter -0-	18.
19.	Add lines 10, 12, 14, 16, and 18	19.
20.	2002 credit carryforward to 2003. Subtract line 19 from line 9. If zero or less, enter -0-	20.
21.	Add lines 19 and 20	21.
22.	Enter the amount from line 10	22.
23.	Total credit carryforward to 2003. Subtract line 22 from line 21	23.

Part III - Employer-Provided Adoption Benefits Line 19

The maximum amount that may be excluded from income for employer-provided adoption benefits is $10,000 per child. If you and another person each received employer-provided adoption benefits in connection with the adoption of the same eligible child, the $10,000 limit must be divided between the two of you. You may divide it in any way you both agree. If the other person is your spouse and you are filing a joint return, this rule does not apply. Cross out the preprinted entry on line 19 and enter above line 19 your share of the $10,000 limit for that child.

Line 20

Did you receive employer-provided adoption benefits for a prior year in connection with the adoption of the same child?

No.	Enter zero on line 20.
Yes.	Use the following chart to find the amount to enter on line 20.

IF the last year you received benefits for was...	THEN enter on line 20 the total of the amounts from...
2001	Lines 16 and 20 of your 2001 Form 8839 for the child
2000	Lines 16 and 20 of your 2000 Form 8839 for the child
1999	Lines 20 and 24 of your 1999 Form 8839 for the child
1998	Lines 18 and 22 of your 1998 Form 8839 for the child
1997	Line 15 of your 1997 Form 8839 for the child

Special rules apply if the prior year benefits were received in connection with the adoption of a foreign child and the adoption became final in 2002. See Exclusion of prior year benefits in the instructions for line 1, column (e).

Line 26

Follow these steps before you fill in the line 26 worksheet on this page.

Step	Action
1	Figure the amount you would enter on line 7 of Form 1040 or 1040A if you could exclude the total amount on Form 8839, line 23.
2	If you received social security benefits, use Pub. 915 to figure the taxable amount of your benefits.
3	If you made contributions to a traditional IRA for 2002 and you were covered by a retirement plan at work or through self-employment, use Pub. 590 to figure your IRA deduction.
4	If you file Form 1040, figure any amount to be entered on the dotted line next to line 34.
5	Complete the following lines on your return if they apply:
		IF you file...	THEN complete...
		Form 1040	Lines 8a, 8b, 9 through 21, 23, 24, and 27 through 33a
		Form 1040A	Lines 8a, 8b, 9 through 14b, 16 and 17

Modified Adjusted Gross Income (AGI) Worksheet - Line 26 (keep for your records)

1.	Enter the amount you would enter on line 7 of Form 1040 or 1040A if you could exclude the total amount on Form 8839, line 23	1.
2.	Enter the amount from Form 8839, line 23	2.
3.	Form 1040 filers, enter the total of lines 8a, 9 through 14, 15b, 16b, 17 through 19, 20b, and 21. Form 1040A filers, enter the total of lines 8a, 9, 10, 11b, 12b, 13, and 14b	3.
4.	Add lines 1, 2, and 3	4.
5.	Form 1040 filers, enter the total of lines 23, 24, and 27 through 33a, plus any amount entered on the dotted line next to line 34. Form 1040A filers, enter the total of lines 16 and 17	5.
6.	Subtract line 5 from line 4	6.
	Form 1040 filers, increase the amount on line 6 above by the total of the following amounts. Enter the total on Form 8839, line 26. Any amount from Form 2555, lines 43 and 48; Form 2555-EZ, line 18; and Form 4563, line 15, and Any exclusion of income from Puerto Rico.
	Form 1040A filers, enter on Form 8839, line 26, the amount from line 6 above.

For purposes of the adoption credit, your modified AGI may be different. If you are taking the credit, be sure to read the instructions for line 8 before you enter an amount on that line.

Paperwork Reduction Act Notice.

We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by Internal Revenue Code section 6103.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is:

Recordkeeping	39 min.
Learning about the law or the form	17 min.
Preparing the form	1 hr., 59 min.
Copying, assembling, and sending the form to the IRS	34 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. See the instructions for Form 1040 or 1040A.

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