Adoption Credit

[KenB]

Client spent $6400 for successful adoption in 2007. Job reimbursed him $2000, which shows up with code 'T' on W-2.

For the 8839 Adoption Credit, does taxpayer get 6400 or 4400? IRS pubs and instructions do not address this issue. The code 'T' means client paid SS and Medicare tax on the $2,000, but the 2k is not included in box 1 of the W-2.

Common sense says 4400, but I don't want to shaft the client $2000 if that is what they deserve.

Thanks for any help.

[veritas]

Form 8839 pg 11-7 of TTB

is required to claim a credit and exclude employer provided benefits from income box 12 (Code T).

Looks like you are correct.

A taxpayer can claim a credit of up to $11,390 and also exclude up
to $11,390 from income for expenses of adopting an eligible child.
The same qualifying expenses cannot be used for both. Limits
apply to the total spent over all years for each effort to adopt an
eligible child. An attempt that leads to adoption and any unsuccessful
attempt to a adopt a different child are treated as one effort