Dependants and Adoption Tax Credits

[andy2016losangeles]

My wife lives in El Salvador and will be giving birth to our baby girl in Oct. We will be registering her at the US Embassy so that she can be a US citizen. She has two kids who were born in El Salvador who are now my financial responsibility. My wife, her two kids (currently in the process of me adopting them), and our new born will be coming in the fall of next year once our immigration documents are finalized. What steps do I need to take in order for me to claim her two kids as dependents or tax credits for adoption and what child tax credits will be available for my baby girl. My wife and I have decided for her to take care of our daughter for the first two years. Will I be able to claim her as a dependent?

Another question. I have not changed my status on my payroll, I still am a single filer, not married. We got married in El Salvador. What steps do I need to take in order for me to change my status on my payroll? 

Thank you for taking the time. 

[erinm0717]

Hello Andy!

Congrats on the new additions!  

Here is some great info on the Adoption Credit and steps to take it: https://turbotax.intuit.com/tax-tips/family/new-addition-adoption-tax-credits/L69hPmzJB

In addition, here is some information on the Child Tax Credit and who qualifies: https://turbotax.intuit.com/tax-tips/family/child-tax-credit/L9ZIjdlZz:

To qualify, the child must: 

• "Be your daughter, son, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or their descendant.
• Be under age 17 at the end of the tax year.
• Not provide more than half of their own financial support during the tax year.
• Must have lived with you for more than half of the tax year (certain exceptions exist).
• Be claimed as a dependent on your tax return.
• Not file a joint tax return for the year (except when only filing to claim a refund of withheld income taxes or estimated taxes paid).
• Be a U.S. citizen, U.S. national, or U.S. resident alien.
• Have a Social Security Number issued by the Social Security Administration that is valid for employment."

If the children do not have SSN's, I would work on that as soon as possible.  The qualifications above will also apply to your newborn. If she meets all of these, you can claim as a dependent.  

There are also many other credits you may qualify for with your children.  Here is a link with the credits and descriptions for them: https://turbotax.intuit.com/tax-tips/family/birth-of-a-child/L26LBBTkd.

In order to change your payroll information, you need to ask your Human Resources Department for a new W-4 form to update this.  Hope this helps!

[NateTheGrEAt]

Hi andy2016losangeles! Congratulations on your growing family...how exciting.

To be claimed as a dependent, a person must be a citizen or resident of the US, Canada, or Mexico. Also, they need to have a social security number. 

Your new daughter will probably be the first eligible to be a dependent since once you register her as a US Citizen you can apply for a SSN for her. After you have the SSN, you can claim her for Child Tax Credit. 

Your wife and two other children may not be able to qualify as dependents until further into the immigration process. They would need to have SSNs and either be a US citizen or resident. While they are living in El Salvador and are not citizens of the US, Canada or Mexico they are not eligible to be a dependent. 

Also, I should mention that there is no adoption credit available for adopting your spouse's children. Unfortunately, this is a rule in US tax law. https://www.irs.gov/taxtopics/tc607

"Qualified adoption expenses don't include expenses that a taxpayer pays to adopt the child of the taxpayer's spouse."

To change your status with payroll, simply complete a new W4 with your employer. However, be aware that until your spouse has a SSN, you cannot file a joint return with her, so you might want to hold off on doing this until further into the immigration process. Otherwise, you could be withholding as married/jointly but may have to file as married/separate and will end up owing taxes. It is safer for now, and would be my recommendation, to continue withholding as single.