Child with special needs. If you adopted a child with special needs and the adoption became final in 2003, you may be able to take a
credit of up to $10,160 per child regardless of the amount of your expenses. See the instructions for line 1, column (d),
on page 2, for the
definition of a child with special needs. You may also be able to exclude from your income up to $10,160 for each child with
special needs regardless
of the amount of employer-provided adoption benefits you received. But your employer must have had a qualified adoption assistance
program. See
Employer-Provided Adoption Benefits on this page.
Use Form 8839 to figure the amount of your adoption credit and any employer-provided adoption benefits you may exclude from
your income. You may be
able to take the credit if you paid qualified adoption expenses in:
- 2002 or
- 2003 and the adoption became final in or before 2003.
You may also be able to take the credit if:
- You adopted a child with special needs and the adoption became final in 2003.
- You paid expenses after 1996 in connection with the adoption of an eligible foreign child and the adoption became final in
2003. See the
instructions for line 1, column (e), that begin on page 2.
- You have a carryforward of an adoption credit from a prior year.
Use Part III of Form 8839 to figure the amount of any employer-provided adoption benefits you may exclude from your income on line 7 of
Form 1040 or 1040A if your employer had a qualified adoption assistance program (see Employer-Provided Adoption Benefits on this page) and
any of the following apply.
- You received employer-provided adoption benefits in 2003. However, special rules apply for benefits received in connection
with the adoption
of an eligible foreign child. See the instructions for line 1, column (e), that begin on page 2.
- You adopted a child with special needs and the adoption became final in 2003.
- You received employer-provided adoption benefits after 1996 in connection with the adoption of an eligible foreign child and
the adoption
became final in 2003. See the instructions for line 1, column (e), that begin on
page 2.
You must complete Part III of Form 8839 before you can figure the credit, if any, in Part II.
An eligible child is:
- Any child under age 18. If the child turned 18 during the year, the child is an eligible child for the part of the year he or she
was under age 18.
- Any disabled person physically or mentally unable to take care of himself or herself.
If you and another person (other than your spouse if filing jointly) adopted or tried to adopt an eligible child, see the
instructions for line 2
on page 3 (or line 19 on page 4 if applicable) before completing Part II (or Part III).
Employer-Provided Adoption Benefits
Employer-provided adoption benefits are amounts your employer paid directly to either you or a third party for qualified adoption
expenses under a
qualified adoption assistance program. Generally, a qualified adoption assistance program is a separate written plan set up by an employer
to provide adoption assistance to its employees. For more details, see Pub. 968, Tax Benefits for Adoption.
Employer-provided adoption benefits should be shown in box 12 of your Form(s) W-2 with a code T. Your salary may 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.
- You adopted a child with special needs. See the instructions for line 1, column (d), on page 2 for the definition of a child
with special
needs.
- The adoption became final in 2003.
- Your employer had a qualified adoption assistance program as described above.
Qualified Adoption Expenses
Qualified adoption expenses are reasonable and necessary expenses directly related to, and for the principal purpose of, the
legal adoption of an
eligible child.
Qualified adoption expenses include:
- Adoption fees.
- Attorney fees.
- Court costs.
- Travel expenses (including meals and lodging) while away from home.
Qualified adoption expenses do not include expenses:
- For which you received funds under any state, local, or Federal program.
- That violate state or Federal law.
- For carrying out a surrogate parenting arrangement.
- For the adoption of your spouse's child.
- Paid or reimbursed by your employer or any other person or organization.
- Paid before 1997.
- Allowed as a credit or deduction under any other provision of Federal income tax law.
Who Can Take the Adoption Credit or Exclude Employer-Provided Adoption Benefits?
You may be able to take the credit or exclusion if all three of the following apply.
- Your filing status is single, head of household, qualifying widow(er), or married filing jointly. If your filing status is
married filing
separately, see Married Persons Filing Separate Returns below.
- Your modified AGI is less than $192,390 or you have a carryforward of an adoption credit from a prior year. To figure your
modified AGI, see
the instructions for line 8 on page 4 (for the credit) or line 26 on page 5 (for the exclusion).
- You report the required information about the eligible child in Part l.
Married Persons Filing Separate Returns
You may be able to take the credit or exclusion if you meet items 2 and 3 listed above and all of the following
apply.
- You lived apart from your spouse during the last 6 months of 2003.
- The eligible child lived in your home more than half of 2003.
- You provided over half the cost of keeping up your home.
