Whoa, TaxMama! This is on the question form Chuck regarding the adoption credit/dependency exemption on a foreign adoption:

The adoption is considered final when the foreign country issues the final adoption decree or it's equivalent if the child comes over on an IR3 Visa which is the Visa a child gets if the adoption is done in the foreign country. The re-adoption is not considered the final date as such, but those expenses can be taken in the following year if the limit was not met the first year. You will find this information using the link you referred to in you answer in Publication 968:

When adoption is final. When the adoption becomes final depends on the type of immediate relative (IR) visa under which the child enters the United States. IR-3 visa. The adoption of a child who enters the United States on an IR-3 visa is treated as final in the year the competent authority enters a decree of adoption. The competent authority is the court or other governmental agency of the foreign country that has jurisdiction and authority to make decisions in matters of child welfare, including adoption.

I'm confident that he can use the credit this year, and possibly the exemption. That one is a little harder, but if you read carefully, the rules for an adopted child have been clarified. The law even used the verbiage: "A legally adopted child or a child placed in the taxpayer's home for adoption by an authorized agency even if the adoption is not final"

My guess is that the child meets the

1. Relationship test because an adopted child or "placed" child is considered to be a child by blood.
2. Support test most likely
3. income test most likely
4. Joint return
5. Residency test (he meets that if he has the IR3 Visa.

So there you go, you have good news for Chuck!

How do I happen to know this? It's not that I'm so smart, it's just that my wife and I are a two time foreign adopters (three children), and I'm an Enrolled Agent with a bunch of clients doing adoptions.

There are now thousands of foreign adoptions every year and we're thankful the IRS has made the rules easier to understand.

BTW, Chuck can apply for a Social Security Number as soon as he's back in the USA (which it sounds like he is) with the child. The child is an automatic citizen when he comes to the USA on the IR3 Visa and will get a certificate automatically.

The Social Security Administration will issue a number with the paperwork he already has. The I RS Pubs talk about ATIN's but they are hard to get and not worth much, try for the real thing and it can be updated later if the name is changed in the re-adoption.

All the best from a long-time subscriber,

Carlos Nichols, EA.

 

 

 

TaxMama note

Apparently, the give-away to Carlos was the word "readoption". There's a whole terminology in the adoption world. That word means the child is already here, with Chuck - so it changes the whole picture.

See the fun things we get to learn.

Though, have you ever noticed, people who get involved in adoptions, especially international ones, often have little or no income in the year of the adoption or the year before the adoption is finalized.

Coincindence? Hardly. It's just that they spend all their time working on the adoption, instead of their jobs or businesses. It becomes all-consuming.

But, it's worth it!