so what do you need to know about adoption expenses what counts and what
doesn't count that's what we're going to talk about today coming up right now
what's up YouTube Mike and Sarah here are back
and of course chipper hey don't forget that about me can't forget the bird
alright guys thanks for joining us if you have not seen part one of this
adoption tax credit video series make sure to go check it out I'm gonna leave
a link in the video's description down below and I'm also gonna leave a link to
that video in the comment section down below and that video is gonna give you a
full more comprehensive overview of how the adoption Tax Credit works and how
the exclusion benefit works as well make sure to check that out if you have not
already in this video Sarah and I are gonna go over the most common adoption
expense questions that are out there so you guys can know when you're going
through the process of adopting what's gonna count and what's not going to
count the important thing for you guys to remember is that regardless of the
expenses you're incurring is make sure and I cannot emphasize this enough but
make sure you're keeping good records without good records you're not gonna be
able to substantiate your expenses if you were to ever be audited let's go
ahead and get started so you know what exhausting expenses count I'm
questioning my if my attorney is helping me with the adoption process
does that count or is it a qualified expense it is so if you're working with
your attorney that's anything related to adopting every one of those expenses are
gonna count just make sure when the attorney sends the invoice to you make
sure you keep it in a separate file so you know exactly you know how much you
were spending I didn't know this until I actually started to research this but
there's some people out there they figure if they're gonna get married they
learn about in this person they're Marian has kids they learn that oh
there's this whole adoption tax credit I wonder if I adopt their kids if I can
get us a big tax credit well you can't you can't adopt if you're getting
married and the person you're marrying has kids unfortunately you cannot adopt
their kids and expect to take an expense deduction do all adoption fees
yes as far as I know of they do when I was looking into this there wasn't a
single expense that I came across that was not deductible I think as long as it
is truly related to adopt the adoption that's it's gonna count and you should
be fine what if I get help from the state or local government to help pay
for every bit up yeah so I know I know there's a lot of programs out there to
help with this because unfortunately there's a lot of kids who need homes and
who need to be adopted whether domestically or for you know from a
foreign country so if you're getting help from the state the way the IRS
views that is they say well this person's trying to adopt but they're
already getting free money from the state or local government so if you're
getting free money from your local government or the state in which you
live then you cannot take an expense deduction for that because that would
kind of be like getting a double benefit you can't get free income and an expense
to that's known as double dipping what if I have to go to court
what expenses count yeah so adoptions can get pretty messy sometimes
unfortunately sometimes there's a court cases involved and you have to step into
a courtroom luckily even though it's a pain if you
have to step into a courtroom and the case revolves around this adoption that
you're in process of doing all of those expenses are gonna count now what if I
have to travel and stay in a motel this one's pretty cool because a lot of times
now I know family members who actually had to do this they adopted somebody
domestically in the US and they had to travel from California and I believe to
Colorado you know to adopt their little girl well
all of those travel expenses the airfare so tell the money they spent on meals
all that kind of stuff because it's related to the adoption all of its gonna
count so even even if you're going to like let's say you want to adopt a child
in India or another country that would count as well so just make sure you keep
lighting set good records and it should be fine what about the cost of a
surrogate arranged oh the surrogate arrangement yeah so they the IRS views
that as its own separate thing so any money you spend in a surrogate parent
arrangement is not gonna help you with your adoption tax credit or exclusion
benefit so those expenses would not count what about if I had to read off
that child what the expenses count yes so for some reason you you know you
adopt a child one time and then circumstances change but later on in
that child's life you have the opportunity to adopt them again anything
you you know go anything spin to readapt them is gonna count what other aspects
of adoption are crucial to know that's a really interesting question because I
learned a lot when I was going through this process of you know studying and
putting this information together that I didn't know so there's the IRS of course
never like to make things easy and the tax code is just complicated so what
they do is they've kind of broken it down into three layers of complexity
when you're thinking about qualified adoption expenses where I would start
with is the first thing is are you good trying to do a domestic adoption or a
foreign adoption that's number one start there because that's gonna impact when
you can deduct those expenses the second thing to look at is to know what stage
in the adoption or you're in so as you guys can probably imagine there's
there's three stages to the adoption process when you first start that's the
beginning stage you know that's before the adoption is final that stage number
one stage number two is is actually win the adoption is final and stage number
three is when you incur expenses after the adoption is final so you can incur
expenses at all those stages and it's just important to know
what says you're at because that's gonna impact when you can actually deduct it
the third and final thing to remember about adoption expenses is you have to
kind of separately break it out in your mind are you or are you going to try to
use those set of expenses to claim the credit or are you gonna try to use those
set of expenses to claim your being exclusion benefit like the money you
would get from your employer so you kind of have to break it down into those
buckets luckily chipper has an awesome chart for
us I'm gonna put up on screen right now
and I'm gonna leave a link on my website on money in life tv.com or you can come
and download this information and directly your your computer I'm also
gonna link up several articles and publications directly to the IRS website
so you can find all of this research for yourself if if for some reason guys I
did not answer your question or if you know Sarah didn't ask it on on this list
of questions let me know I'm happy to answer any questions you may have and to
the best of my ability I will answer your questions so please do not hesitate
to ask alright guys well thank you so much for hanging out with Sarah and I
today we really appreciate you taking the time to watch this video if you're
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you too but if you like the video smash that like button let us know that you
liked it especially if you want to see more content like this and Sarah you did
an awesome job I'm so glad that you're able to be on the show this week thank
you thank you for being a part of the channel and for supporting me thus far I
really appreciate it with that being said we love you guys thank you for
watching and we hope you have a great week and also we wish you the best of
luck in the adoption process bye YouTube we love you live life uncaged! Peace!