Child Tax Credit

[Kram BergGold]

My client adopted a child, born in 2005, and got her in late July. It seems from my reading of the law that she is not allowed to claim a child tax credit because the child lived with her for less than 1/2 of the year. Is this correct?

[Koss]

Adopted Child

My short answer is I think you're right. I think your client is out of luck for 2008, since it was less than six months... not just for the Child Tax Credit, though. It calls into question whether they can even take a dependency exemption. Although I guess the child would be a qualifying relative if they provided more than half the child's support, as long as they are calculating "more than half" based on support for the entire year...

Here's a few other warped thoughts:

In theory, it may hinge on when the adoption became final.

From your post, it sounds like the child did not live with your client at all until late July.

Is that correct?

I haven't worked with a lot of adoptive parents. But I think in many cases, the child begins living with the adoptive parent before the adoption becomes final, i.e., it often begins with placement in the home as a foster child. The adoption may not become final until many months after the child begins living with the adoptive parent.

But if it's a foreign child, it may actually work the other way around. The prospective parents go to Russia, or India, or Brazil, and meet the child, sometimes more than once, spending several days with the child, and then they make a decision to adopt. Then sometimes they have to return to the USA, and it may take months for the adoption to become final. Then they go back, pick up the child, and return to the USA with the child.

So at least in theory, there could be some scenarios in which, for example, the adoption became final on June 17, 2008, but the child did not actually begin living with the taxpayer until July 6, 2008.

Mathematically, that's less than six months, but...

In this example, the time period from June 17 to July 6 could arguably be construed as a temporary absence from the home of the adoptive parent. In other words, when the adoption became final on June 17, the taxpayer's home became the principal domicile of the child, and the child just happened to be staying somewhere else until July 6.

That's probably not gonna help your client, but it's interesting to think about...

BMK

[dyne]

On page 3-18 on the right at the bottom of THETAXBOOK it says that an
adopted child is always treated as the taxpayer's child. Less than half of the year,
No child tax credit. Did you notice that the new tax law increases the tax credit
from $1,000 to $3,000?