(1) Qualified adoption expenses The term ?qualified adoption expenses? means reasonable and necessary adoption fees, court costs, attorney fees, and other expenses? (A) which are directly related to, and the principal purpose of which is for, the legal adoption of an eligible child by the taxpayer,
So the question is what is "other expenses"?
How about airline tickets to destination country to pick up child. I would venture yes, but at around 3k it seems kind of expensive.
Lodging while in the foreign country. You don't just pick up the child and come back home. You have to go there, do more paperwork, get acquainted with each other, etc. I'm guessing this is really pushing the envelope, but it is ordinary and necessary.
Driving costs. You'll be lots of driving in the US. It's a bureaucratic nightmare, but you have to government offices, sometimes in the state capital, as well as to the adoption office. I would think these are deductible, but wonder whether you use business mileage, business mileage minus the depreciation component, charitable mileage, medical mileage, or actual expenses. And I guess some people may fly to the required government offices.
Photocopy costs and notary costs. You'll be photocopy over 1000 pages, and notarizing over 100 pages. Seems allowed.
What are typical "other expenses"?
Second, how to divide expenses when adopting many kids from the same adoption agency? Say if you adopt one kid the adoption fee is $15,000. For two kids (say twins) the fee might be $18,000. On form
8839, they have
- Maximum adoption credit per child = 11650 = 11650
So if you put $9,000 for each child that yields the best result because you'll get a credit for the full $18,000 of adoption fees. But if you put $15,000 for one and $3,000 for the other, you'll only get $11,650 + $3,000 = $14,650.
And finally, if you don't have social numbers by 4/15/2010, then what to do? Is it possible to file your tax return without claiming extra exemptions and the adoption credit, but then file an amended return when you get this info?
Incidentally it would be a good deal because the IRS would pay interest, and their interest is better than the typical bank account.