Claiming adoption expenses prior to identifying a (domestic) child

Forum|Forum|4 years ago
February 26, 2022
1 reply
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I've searched the forums, and I believe I can claim adoption expenses, but I'm having trouble doing so.

My wife and I started the adoption process in 2020. We spent ~$25,000 in 2020 in adoption expenses to a domestic agency as a 'down payment'. The process hasn't moved much since then, as we are still waiting to find a match. My understanding is that I can claim these expenses on my 2021 taxes. However, when doing this on TurboTax, they ask for the adopted childs' name (which I obviously don't have yet, given that we are still looking for a match). When I don't provide a name, it says I'm not eligible.

In short, should I be able to claim my 2020 adoption expenses on my 2021 taxes even though I'm still looking for a domestic match? If so, am I somehow entering them wrong on TurboTax because it requires a name for the child?

Any help would be appreciated, as I don't want to mess this up and find out later that I missed the opportunity to claim the expenses.

For the record, below is a copy/paste from a TurboTax post explaining who is eligible to claim adoption costs, and I think this means I should be eligible:

"A domestic adoption is the adoption of a U.S. child (an eligible child who is a citizen or resident of the U.S. or its possessions before the adoption begins). Qualified adoption expenses paid before the year the adoption becomes final are permitted as a credit for the tax year following the year of payment (even if the adoption isn't finalized and even if an eligible child was never identified)."

Best answer by RaifH

Yes, your expenses paid in 2020 can be used towards the adoption credit in 2021 for a domestic child even if the adoption has not been finalized.

To claim them in TurboTax:

Select Start/Revisit in Federal > Deductions & Credits > You and Your Family > Adoption Credit.
For your child's information, enter "Unknown" for first and last names. The birth year can be approximate. Leave the social security number field blank.
Select The adoption proceedings for Unknown began in 2020 or earlier.
Select None of the above to Let us know which one applies to your adoption.
Enter your 2020 adoption expenses and leave the 2021 fields blank. TurboTax should apply the credit based on your 2020 expenses, up to $14,440 per adoption.

RaifHAnswer

Level 10

Yes, your expenses paid in 2020 can be used towards the adoption credit in 2021 for a domestic child even if the adoption has not been finalized.

To claim them in TurboTax:

Select Start/Revisit in Federal > Deductions & Credits > You and Your Family > Adoption Credit.
For your child's information, enter "Unknown" for first and last names. The birth year can be approximate. Leave the social security number field blank.
Select The adoption proceedings for Unknown began in 2020 or earlier.
Select None of the above to Let us know which one applies to your adoption.
Enter your 2020 adoption expenses and leave the 2021 fields blank. TurboTax should apply the credit based on your 2020 expenses, up to $14,440 per adoption.