Can adoption credit be used for previously owed back taxes?

[leored9991]

My husband and I owe back taxes and each year the irs applies our refund to the balance. Well we adopted our daughter and was told we could use the adoption credit for any tax liability  we owe. Can this credit be used for back taxes we owe?

[DaveF1006]

It depends. The adoption credit is used for any tax liability you owe in the year of the adoption but cannot be applied retroactively to past year's tax liabilities.

[Opus 17]

Only in the sense that if you claim a credit for your expenses, it will probably increase your refund, so that when the IRS offsets the refund, a larger amount will be applied to the debt.  If the credit is larger than your remaining debt, you would clear your debt and get the rest as a refund.

The credit itself is non-refundable, which means it can only zero out your tax bill.  For example, suppose you have an $8000 tax bill and you paid $9000 in withholding, you would expect a $1000 refund.  You can use up to $8000 of the adoption credit, which will zero out your tax and result in a $9000 refund (all your withholding coming back to you).  In your case, that will be applied to your past due taxes.