Adoption credit for children who qualify as 'Special Needs' for the aoption credit purposes

[JDVtaxes]

My clients adopted 3 children in 2015.

The state determined that these children qualify as 'Special Needs' for purposes of the adoption credit.

They should be eligible for the credit, even when no adoption expenses have been incurred.

However, when I process the Federal Form 8839, no credit is generated.

Is the credit for 'Special Needs' children only availble in the year of the adoption.

Thanks in advance for your help!

[BobKamman]

The credit is allowed only in the year the adoption becomes final.  (A special rule may apply if it takes more than two calendar years.)

If not used that year, it can be carried forward. I'm not sure whether credit on a late-filed return is still eligible for carryover.  Also, at one time the credit had to be carried back before being carried forward. I don't recall the year that change was made.

The credit for special-needs adoption this year is more than $14,000, regardless of whether anything was paid or how much.  They missed out on more than $40,000, back in 2015?  Who was doing their returns then?  No questions asked about adding three new dependents?

[JDVtaxes]

Thanks for the quick reply.

I wasn't doing their returns back then.

Also, up until this year, they had no tax liability, nor did they have adoption expenses.

But because the kids are special needs, the credit should be available regardless of having expenses or not.

These kids fall within eligibility with everything you explained - but the ProSeries software is not giving them the credit, and I thought I was missing something.

I'll have to check with the software folks to see if I am missing something.

Thanks again...

[BobKamman]

A 2015 credit can be carried forward five years.  Can you claim the credit on a 2015 amended return, then carry it forward through 2019?  Someone might know the answer to that without researching statutes and case law.