General Instructions

Future Developments

For the latest information about developments related to Form 8839 and its instructions, such as legislation enacted after they are published, go to www.irs.gov/form8839.

Purpose of Form

Use Form 8839 to figure your adoption credit and any employer-provided adoption benefits you can exclude from your income. You can claim both the exclusion and the credit for expenses of adopting an eligible child. For example, depending on the cost of the adoption, you may be able to exclude up to $12,970 from your income and also be able to claim a credit of up to $12,970. But, you cannot claim both a credit and exclusion for the same expenses. See Qualified Adoption Expenses and Employer-Provided Adoption Benefits, later.

Adoption credit.   Use Form 8839, Part II, to figure the adoption credit you can take on Form 1040, line 53 or Form 1040NR, line 50. Check box c on that line and enter “8839” in the space next to box c. You may be able to take this credit in 2013 if any of the following statements are true.
  1. You paid qualified adoption expenses in connection with the adoption of an eligible U.S. child (including any expenses paid in connection with adopting an eligible U.S. child with special needs) in:

    1. 2012 and the adoption was not final at the end of 2012, or

    2. 2013 and the adoption became final in or before 2013.

  2. You adopted an eligible U.S. child with special needs and the adoption became final in 2013. (In this case, you may be able to take the credit even if you did not pay any qualified adoption expenses.)

  3. You paid qualified adoption expenses in connection with the adoption of an eligible foreign child in:

    1. 2013 or prior years and the adoption became final in 2013, or

    2. 2013 and the adoption became final before 2013. 
      See Column (e), later.

  4. You have a carryforward of an adoption credit from 2012.

Income exclusion for employer-provided adoption benefits.   Use Form 8839, Part III, to figure the employer-provided adoption benefits you can exclude from your income on Form 1040, line 7, or Form 1040NR, line 8. You may be able to exclude these benefits from income if your employer had a written qualified adoption assistance program (see Employer-Provided Adoption Benefits, later) and any of the following statements are true.
  1. You received employer-provided adoption benefits in 2013. However, special rules apply for benefits received in connection with the adoption of an eligible foreign child. See Column (e), later.

  2. You adopted an eligible U.S. child with special needs and the adoption became final in 2013.

  3. You received employer-provided adoption benefits in connection with the adoption of an eligible foreign child in:

    1. 2013 or prior years and the adoption became final in 2013, or

    2. 2013 and the adoption became final before 2013. 
      See Column (e), later.

  For purposes of calculating the adoption credit in Part II, qualified adoption expenses (defined later) do not include expenses reimbursed by an employer under a written qualified adoption assistance program (see Employer-Provided Adoption Benefits, later). For this reason, you must complete Form 8839, Part III, before you can figure the credit, if any, in Part II. But see Child with special needs, later.

  
You cannot exclude employer-provided adoption benefits if your employer is an S corporation in which you own more than 2% of the stock or stock with more than 2% of the voting power.

Income limit.   The income limit on the adoption credit or exclusion is based on modified adjusted gross income (MAGI). For 2013, use the following table to see if the income limit will affect your credit or exclusion.
IF your MAGI is... THEN the income limit...
$194,580 or less will not affect your credit or exclusion.
Between $194,581 and $234,579 will reduce your credit or exclusion.
$234,580 or more will eliminate your credit or exclusion.

Definitions

Eligible Child

An eligible child is:

  • Any child under age 18. If the child turned 18 during the year, the child is an eligible child for the part of the year he or she was under age 18.

  • Any disabled individual physically or mentally unable to take care of himself or herself.

If you and another person (other than your spouse if filing jointly) adopted or tried to adopt an eligible U.S. child, see Line 2 (or Line 17, if applicable), later, before completing Part II (or Part III).

Qualified Adoption Expenses

Qualified adoption expenses are reasonable and necessary expenses directly related to, and for the principal purpose of, the legal adoption of an eligible child.

Qualified adoption expenses include:

  • Adoption fees,

  • Attorney fees,

  • Court costs,

  • Travel expenses (including meals and lodging) while away from home, and

  • Re-adoption expenses relating to the adoption of a foreign child.

Qualified adoption expenses do not include expenses:

  • For which you received funds under any state, local, or federal program,

  • That violate state or federal law,

  • For carrying out a surrogate parenting arrangement,

  • For the adoption of your spouse's child,

  • Reimbursed by your employer or otherwise, or

  • Allowed as a credit or deduction under any other provision of federal income tax law.

Employer-Provided Adoption Benefits

In most cases, employer-provided adoption benefits are amounts your employer paid directly to either you or a third party for qualified adoption expenses under a qualified adoption assistance program. But see Child with special needs, later.

A qualified adoption assistance program is a separate written plan set up by an employer to provide adoption assistance to its employees. For more details, see Pub. 15-B, Employer's Tax Guide to Fringe Benefits.

Employer-provided adoption benefits should be shown in box 12 of your Form(s) W-2 with code T. Your salary may have been reduced to pay these benefits. You may also be able to exclude amounts not shown in box 12 of your Form W-2 if all of the following apply.

  • You adopted a child with special needs. See Column (d), later, for the definition of a child with special needs.

  • The adoption became final in 2013.

  • Your employer had a written qualified adoption assistance program as described earlier.

The following examples help illustrate how qualified adoption expenses and employer-provided adoption benefits apply to the maximum adoption credit allowed.

Example 1.

Madelyn paid $10,000 in qualified adoption expenses for the adoption of an eligible child. Under a qualified adoption assistance program, Madelyn's employer reimbursed her for $4,000 of those expenses. Madelyn may exclude the $4,000 reimbursement from her income. However, because of the employer reimbursement, $4,000 of her expenses no longer meet the definition of qualified adoption expenses. As a result, Madelyn's maximum adoption credit is limited to $6,000 ($10,000 – $4,000).

Example 2.

Haylee paid $20,000 in qualified adoption expenses for the adoption of an eligible child, including $8,000 of legal fees. Under a qualified adoption assistance program, Haylee's employer reimbursed the $8,000 of legal fees. Haylee may exclude the $8,000 employer reimbursement from her income. However, because of the employer reimbursement, $8,000 of Haylee's expenses no longer meet the definition of qualified adoption expenses. As a result, Haylee's maximum adoption credit is limited to $12,000 ($20,000 - $8,000).

Example 3.

The facts are the same as in Example 2 except that instead of reimbursing Haylee for her legal fees, the employer directly paid the $8,000 to the law firm. The employer's payment of the legal fees produces the same result as the employer's reimbursement of the legal fees in Example 2 ($8,000 exclusion and $12,000 credit).

Example 4.

Paul paid $30,000 in qualified adoption expenses to adopt an eligible foreign child, and the adoption became final in 2013. Under a qualified adoption assistance program, Paul's employer reimbursed him for $12,970 of those expenses. Paul may exclude the $12,970 reimbursement from his income. The remaining $17,030 of expenses ($30,000 – $12,970) continue to be qualified adoption expenses that are eligible for the credit. However, Paul's credit is dollar-limited to $12,970. The remaining $4,060 ($30,000 – $12,970 – $12,970) may never be claimed as a credit or excluded from gross income.

Who Can Take the Adoption Credit or Exclude Employer-Provided Adoption Benefits?

You may be able to take the credit or exclusion if all three of the following statements are true.

  1. Your filing status is single, head of household, qualifying widow(er), or married filing jointly. Generally, if you are married, you must file a joint return to take the credit or exclusion. However, if you are married and are not filing jointly, you may be able to take the credit or exclusion on your own return if you are considered unmarried because you are legally separated or living apart from your spouse and you meet certain other requirements. See Married Persons Not Filing Jointly, later.

  2. Your modified adjusted gross income (MAGI) is less than $234,580 or you have a carryforward of an adoption credit from 2012. To figure your MAGI, see Line 7 (for the credit) or Line 23 (for the exclusion), later.

  3. You report the required information about the eligible child in Part l.

Married Persons Not Filing Jointly

You may be able to take the credit or exclusion if all of the following apply.

  • Statements (2) and (3) under Who Can Take the Adoption Credit or Exclude Employer-Provided Adoption Benefits are true.

  • You lived apart from your spouse during the last 6 months of 2013.

  • The eligible child lived in your home more than half of 2013.

  • You provided over half the cost of keeping up your home.

Additionally, a person who is filing separately may claim an adoption credit carryforward from a prior year or years, provided that, if the person was married in the year in which the qualified adoption expenses first became allowable for the credit, the person filed a joint return for that year.

When To Take the Credit or Exclusion

When you can take the adoption credit or exclusion depends on whether the eligible child is a citizen or resident of the United States (including U.S. possessions) at the time the adoption effort began (domestic adoption).

Child who is a U.S. citizen or resident (U.S. child).   If the eligible child is a U.S. citizen or resident, you can take the adoption credit or exclusion even if the adoption never became final. Take the credit or exclusion as shown in the following table.

  
Domestic Adoption
IF you pay  
qualifying expenses in...
 THEN take the credit in...
Any year before the year the adoption becomes final  The year after the year  
 of the payment.
The year the adoption becomes final  The year the adoption  
 becomes final.
Any year after the year the adoption becomes final  The year of the payment.
IF your employer pays for qualifying expenses under an adoption assistance program in...  THEN take the  
 exclusion in....
Any year  The year of the payment.

Child with special needs.   If you adopt a U.S. child with special needs, you may be able to exclude up to $12,970 and claim a credit for additional expenses up to $12,970 (minus any qualified adoption expenses claimed for the same child in a prior year). The exclusion may be available, even if you or your employer did not pay any qualified adoption expenses, provided the employer has a written qualified adoption assistance program. See Column (d), later, for more information.

Foreign child.   If the eligible child is a foreign child, you cannot take the adoption credit or exclusion unless the adoption becomes final. A child is a foreign child if he or she was not a citizen or resident of the United States (including U.S. possessions) at the time the adoption effort began. Take the credit or exclusion as shown in the following table.

  
Foreign Adoption
IF you pay  
qualifying expenses in...
 THEN take the credit in...
Any year before the year the adoption becomes final  The year the adoption  
 becomes final.
The year the adoption becomes final  The year the adoption  
 becomes final.
Any year after the year the adoption becomes final  The year of the payment.
IF your employer pays for qualifying expenses under an adoption assistance program in...  THEN take the  
 exclusion in....
Any year before the year the adoption becomes final  The year the adoption  
 becomes final.
The year the adoption becomes final  The year the adoption  
 becomes final.
Any year after the year the adoption becomes final  The year of the payment.

  For more information, see Column (e) later. To find out when a foreign adoption is treated as final, see Rev. Proc. 2005-31, 2005-26 I.R.B. 1374, available at www.irs.gov/irb/2005-26_IRB/ar14.html, and Rev. Proc. 2010-31, 2010-40 I.R.B. 413, available at www.irs.gov/irb/2010-40_IRB/ar10.html.

  If your employer makes adoption assistance payments in a year before the adoption of a foreign child is final, you must include the payments in your income in the year of the payment. Then, on your return for the year the adoption becomes final, you can make an adjustment to take the exclusion.

  
Your employer is not required to withhold income tax on payments for qualifying expenses under an adoption assistance program. If you must include the payments in income in the year paid because your adoption of a foreign child is not final, your withholding may not be enough to cover the tax on those payments. You may need to give your employer a new Form W-4 to adjust your withholding or make estimated tax payments to avoid a penalty for underpayment of estimated tax.


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