Hi @meehir007,
Thanks so much for your great questions! I'm happy to help.
- Since 2023 was the first year you incurred qualified adoption expenses for a domestic adoption, you would not be allowed to take the adoption credit in tax year 2023.
- On your 2024 tax return, the $8k you paid in 2023 would be eligible to be considered as an adoption credit. If you finalize the adoption in 2024, you would also be eligible to use the $4k of qualified adoption expenses paid so far in 2024.
- The credit cannot be taken away by the IRS if you and your wife never identify a child or finalize the adoption.
- The adoption credit is non-refundable, which means that it can reduce your tax liability down to zero, but it cannot give you a refund above and beyond that. But the good news is that the adoption credit carries forward for up to five years, thus increasing the likelihood that you could eventually take the credit.
- Here are some resources for you:
I hope this information is helpful! I'll stay tuned in case you have any follow-up questions. Thanks so much and best wishes to you and your wife on the adoption!
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