For several weeks, we have been sharing a series of posts about the Adoption Tax Credit, written by Rob Pederson. Rob is a CPA with 11 years of experience – 4 in public accounting as an auditor and tax preparer, and 7 in the accounting departments of two publicly traded companies. He also owns and writes for getyourcpa.com, a site that helps accountants pass the CPA exam and offers career advice. You can find the rest of this series in our archives. Find more Answers About the Adoption Tax Credit in Part 1, Part 2, and Part 3 of this series.
Getting the Child’s Identification Number
If you qualify for claiming the child as a dependent on your tax return (see instructions to Form 1040) and for some reason, you cannot get the child’s social security number (SSN) or the child does not have one, you should apply for an Adoption Tax Identification Number (ATIN) or International Tax Identification Number (ITIN). Without an ATIN, ITIN or SSN, you cannot claim the child as a dependent on you tax return.
The ATIN is a temporary identification number that lasts for two years, or until a SSN is obtained, whichever comes first. It is easier and faster to obtain than a SSN. The ATIN takes about 8 weeks to receive once you apply for it, so make sure you apply at least 8 weeks in advance of filing your taxes.
To apply for the ATIN, you should fill out Form W-7A
. To apply for an ITIN, fill out Form W-7
. To apply for a social security number, fill out Form SS-5
You should apply for an ATIN or ITIN if all of the following are true:
- You have a child legally placed in your home for adoption by an authorized placement agency.
- The child you are adopting is either a citizen of the U.S. or has a Permanent Resident Alien Card or Certificate of Citizenship.
- You tried to get the child’s SSN from the parents, adoption agency or other appropriate parties, but were unsuccessful.
- You cannot obtain an SSN for the child from the Social Security Administration for any reason. (e.g. the adoption is not final).
- You can claim the child as a dependent on your tax return under the instructions for Form 1040 and Publication 501.
If you do not qualify to get an ATIN, ITIN, or SSN, write "see attached statement" in the "Child’s Identifying Number" column of Form 8839
. This might be because the adoption is not yet final or was unsuccessful. In the attached statement, give the name and address of any adoption agency or attorney that assisted you in the adoption and include your name and social security number on the statement.
Special Needs Adoption
If you are adopting a special needs child, you can take the full amount of the credit, regardless of how much money you spent on the adoption. Even if you only spent $5,000, you can take a credit for the full $12,150. The states have the responsibility for determining whether an adoption is considered special needs. To qualify, the child must also be a U.S. citizen or resident.
If you complete a foreign adoption in the current year, there may be limits on what costs you can include. If you had adoption expenses prior to 1996, none of these costs qualify for the credit. In addition, only $5,000 of costs incurred prior to 2002 qualify for the credit.
Splitting The Credit
If you and someone other than your spouse with whom you file jointly both had adoption expenses for the same child, you must split the credit between you and the other person. This split can be done in any way you both agree to – it does not have to be a 50/50 split.