Child Tax Credit - Newly Adopted Children


P

PaulTry

Taxpayers adopted two children (brothers), US citizens,
adoption final 12/28/2006. Child 1 was born in 2005 and
lived with taxpayers since 12/06/2006. Child 2 was born
08/29/2006 and lived with taxpayers since birth. Both
children meet the Pub 17 definition of
dependents/exemptions.

Per Pub 972, a qualifying child for purposes of the child
tax credit is a child who:

1. Is your son, daughter, stepchild, foster child...,

2. Was under age 17 at the end of 2006,

3. Did not provide over half of his or her own support for
2006,

4. Lived with you for more than half of 2006 (see Internal
Revenue Service exceptions to time lived with you below),
and

5. Was a U.S. citizen, a U.S. national, or a resident of the
United States. If the child was adopted, see Adopted child
below.

Adopted child. An adopted child is always treated as your
own child. An adopted child includes a child lawfully placed
with you for legal adoption. If you are a U.S. citizen or
U.S. national and your adopted child lived with you all year
as a member of your household in 2006, that child meets
condition (5) above to be a qualifying child for the child
tax credit.

Exceptions to time lived with you. A child is considered to
have lived with you for all of 2006 if the child was born or
died in 2006 and your home was this child=92s home for the
entire time he or she was alive. Temporary absences for
special circumstances, such as for school, vacation, medical
care, military service, or detention in a juvenile facility,
count as time lived with you. There are also exceptions for
kidnapped children and children of divorced or separated
parents.

Both children meet qualifying conditions 1, 2, 3 and 5.

Child 2 appears to meet the exception to condition 4 in that
"the child was born...in 2006 and your home was this
child=92s home for the entire time he or she was alive."

I can't make Child 1 fit that exception. To the contrary,
though the "Adopted child" paragraph appears to apply to
non-US citizen adoptees, it may specifically require that
the "...adopted child lived with you all year as a member of
your household in 2006..." (though this conflicts with the
"more than half of 2006" rule in condition 4.)

Any agreement or disagreement with my take on this? Any
knowledge of rev regs or rules that address the situation
and would qualify Child 1 for the credit?

TaxAct software disallows the additional child tax credit
for both children when correct dates of birth and months
living with taxpayers (1 for Child 1, 5 for Child 2) are
input. Changing 5 months to 7 or more for Child 2 adds the
$1,000 credit. If, in fact, Child 2 qualifies for the
credit, it appears the software doesn't take date of birth
into account.
 
Last edited by a moderator:
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L

ltsllc

PaulTry said:
Taxpayers adopted two children (brothers), US citizens,
adoption final 12/28/2006. Child 1 was born in 2005 and
lived with taxpayers since 12/06/2006. Child 2 was born
08/29/2006 and lived with taxpayers since birth. Both
children meet the Pub 17 definition of
dependents/exemptions.
....
Sorry, it appears that Child 1 is NOT a qualifying child for
the child tax credit since the child did not live with you
for more than 6 months in 2006.

Rudy
www.LizcanoTaxServicesLLC.com
 
Last edited by a moderator:
M

Missy

PaulTry said:
Taxpayers adopted two children (brothers), US citizens,
adoption final 12/28/2006. Child 1 was born in 2005 and
lived with taxpayers since 12/06/2006. Child 2 was born
08/29/2006 and lived with taxpayers since birth. Both
children meet the Pub 17 definition of
dependents/exemptions.
...
Child #2 born in 2006 is considered to have been living with
you for 12 months. Change from 5 months to 12 and see what
happens. A child living all of the year after birth is
considered to be living for the 'whole' year.

Missy Doyle
 
Last edited by a moderator:
B

brownie

PaulTry said:
Taxpayers adopted two children (brothers), US citizens,
adoption final 12/28/2006. Child 1 was born in 2005 and
lived with taxpayers since 12/06/2006. Child 2 was born
08/29/2006 and lived with taxpayers since birth. Both
children meet the Pub 17 definition of
dependents/exemptions.
...
Child 1 is not your qualifying child (did not live with you
for greater than 6 months) and is also not your qualifying
relative (assuming you did not provide more than 1/2 support
for child 1 based on living with you for only 1 month). So
child 1 is not your dependent and cannot qualify you for the
CTC. Child 2 is assumed to have lived with you all year (12
months) since child 2 has lived with you since being born
during the tax year. So child 2 is your dependent and does
qualify you for the federal CTC. Input 12 months for child 2
living with you because the child was born during the tax
year.
 
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H

Harlan Lunsford

PaulTry said:
Taxpayers adopted two children (brothers), US citizens,
adoption final 12/28/2006. Child 1 was born in 2005 and
lived with taxpayers since 12/06/2006. Child 2 was born
08/29/2006 and lived with taxpayers since birth. Both
children meet the Pub 17 definition of
dependents/exemptions.

Per Pub 972, a qualifying child for purposes of the child
tax credit is a child who:

1. Is your son, daughter, stepchild, foster child...,

2. Was under age 17 at the end of 2006,

3. Did not provide over half of his or her own support for
2006,

4. Lived with you for more than half of 2006 (see Internal
Revenue Service exceptions to time lived with you below),
and

5. Was a U.S. citizen, a U.S. national, or a resident of the
United States. If the child was adopted, see Adopted child
below.

Adopted child. An adopted child is always treated as your
own child. An adopted child includes a child lawfully placed
with you for legal adoption. If you are a U.S. citizen or
U.S. national and your adopted child lived with you all year
as a member of your household in 2006, that child meets
condition (5) above to be a qualifying child for the child
tax credit.

Exceptions to time lived with you. A child is considered to
have lived with you for all of 2006 if the child was born or
died in 2006 and your home was this child=92s home for the
entire time he or she was alive. Temporary absences for
special circumstances, such as for school, vacation, medical
care, military service, or detention in a juvenile facility,
count as time lived with you. There are also exceptions for
kidnapped children and children of divorced or separated
parents.

Both children meet qualifying conditions 1, 2, 3 and 5.

Child 2 appears to meet the exception to condition 4 in that
"the child was born...in 2006 and your home was this
child=92s home for the entire time he or she was alive."

I can't make Child 1 fit that exception. To the contrary,
though the "Adopted child" paragraph appears to apply to
non-US citizen adoptees, it may specifically require that
the "...adopted child lived with you all year as a member of
your household in 2006..." (though this conflicts with the
"more than half of 2006" rule in condition 4.)

Any agreement or disagreement with my take on this? Any
knowledge of rev regs or rules that address the situation
and would qualify Child 1 for the credit?

TaxAct software disallows the additional child tax credit
for both children when correct dates of birth and months
living with taxpayers (1 for Child 1, 5 for Child 2) are
input. Changing 5 months to 7 or more for Child 2 adds the
$1,000 credit. If, in fact, Child 2 qualifies for the
credit, it appears the software doesn't take date of birth
into account.
That's why you have to override and use 12 months instead of
4 or 5, whatever.

ChEAr$,
Harlan Lunsford, EA n LA
 
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