International Adoption and Tax Exemption


B

Briaric

I understand the tax credit and we will be taking that for
this year but what I am wondering about is the dependency
for a boy that we adopted from Russia on August 20th. Of
the 5 "rules" listed below we meet 4 of the 5. The question
is on the providing more than half of the support. We have
no clue of what the Russian orphanage provided for support.
We can calculate our side and it will be significant. Any
ideas on what we can do here or where to look for resources
on this? Web searches have not yielded much.

Thanks much,

Brian

Who is a Dependent?

According to the IRS, a dependent is a person who meets all
five of the following criteria:

1. The person is a member of your household, or related to you.
2. You provide at least half of the person?s support.
3. The person?s gross income is less than $3,050.
4. The person must not have filed a joint return, except
in certain circumstances.
5. The person must be a U.S. citizen or resident.

Basically, you can claim the person as a dependent if 1) the
person is a relative and 2) you provided more than half of
the person?s support and 3) the person didn?t make too much
money on his or her own.

But, because the IRS rules are incredibly complicated, you
need to take a very detailed look at each of these tests, to
make sure that the person really counts as a dependent.
Remember: this is a Pass/Fail situation. If the person
doesn?t pass all these tests, the IRS will not allow you to
claim him or her as a dependent.
 
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A

A.G. Kalman

riaric said:
I understand the tax credit and we will be taking that for
this year but what I am wondering about is the dependency
for a boy that we adopted from Russia on August 20th. Of
the 5 "rules" listed below we meet 4 of the 5. The question
is on the providing more than half of the support. We have
no clue of what the Russian orphanage provided for support.
We can calculate our side and it will be significant. Any
ideas on what we can do here or where to look for resources
on this? Web searches have not yielded much.

Thanks much,

Brian

Who is a Dependent?

According to the IRS, a dependent is a person who meets all
five of the following criteria:

1. The person is a member of your household, or related to you.
2. You provide at least half of the person?s support.
3. The person?s gross income is less than $3,050.
4. The person must not have filed a joint return, except
in certain circumstances.
5. The person must be a U.S. citizen or resident.

Basically, you can claim the person as a dependent if 1) the
person is a relative and 2) you provided more than half of
the person?s support and 3) the person didn?t make too much
money on his or her own.

But, because the IRS rules are incredibly complicated, you
need to take a very detailed look at each of these tests, to
make sure that the person really counts as a dependent.
Remember: this is a Pass/Fail situation. If the person
doesn?t pass all these tests, the IRS will not allow you to
claim him or her as a dependent.
There are some special rules for legally adopted children
for tax year 2004. A legally adopted child will be
considered your child under the relationship test as long as
the child was placed with you by an authorized placement
agency (any person or court authorized under state law).
Even if you get by the relationship test, you appear to fail
the citizenship or resident test. Assuming that the child
was not a US citizen or resident of the US, Canada or Mexico
(you said Russia), then an adopted child must be present in
your household for the whole tax year to qualify as your
dependent.
 
B

Briaric

A.G. Kalman said:
riaric wrote:
There are some special rules for legally adopted children
for tax year 2004. A legally adopted child will be
considered your child under the relationship test as long as
the child was placed with you by an authorized placement
agency (any person or court authorized under state law).
Even if you get by the relationship test, you appear to fail
the citizenship or resident test. Assuming that the child
was not a US citizen or resident of the US, Canada or Mexico
(you said Russia), then an adopted child must be present in
your household for the whole tax year to qualify as your
dependent.
I am not sure that I follow the logic on citizenship test.
Since we went to court in Russia and had an IR-3 visa. The
minute we passed through immigration in the U.S. (September
13) the child became a U.S. citizen. This was a law that was
passed a few years ago and is nice. I think the real
question is on support but I don't mind enlightenment on all
points.

Regards,

Brian
 
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A

A.G. Kalman

I am not sure that I follow the logic on citizenship test.
Since we went to court in Russia and had an IR-3 visa. The
minute we passed through immigration in the U.S. (September
13) the child became a U.S. citizen. This was a law that was
passed a few years ago and is nice. I think the real
question is on support but I don't mind enlightenment on all
points.
The way the law is written, an exception to the residency,
citizen test exists for an adopted child. Normally, the
person only has to be a resident or citizen for part of the
tax year. However, if you adopt an alien child, then that
child would have to be a resident/citizen for the entire
year.

I have no idea why this exception is in the law, but it is!
See IRS Regulation Sec. 1.152-2
 

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