The new $5k rule is to get a refundable portion after your tax liability is wiped out. You may have had a larger tax liability that was reduced so that you refund is higher.
Follow these steps:
- Take a look at your form 8839 and verify the numbers.
- Take a look at sch 3 line 6c for adoption credit.
- Take a look at your 1040. Look at the tax on line 16.
- Now, look at line 20 for the credit from sch 3 to pull over.
- Any adoption credit left after wiping out your tax liability, moved down the 1040 to line 30 for a maximum of $5,000.
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