Adopting Step-Child

Today TaxMama hears from Kelly in the TaxQuips Forum who is doing something unusual. “I tried to claim the adoption credit on this year’s taxes.  It was denied because “I can not use this credit for the adoption of a step-child”.  After my divorce was final, I began adoption proceedings for my son. They were final at the beginning of this year.  Yes, he was a stepchild when I was married. But when I started adoption proceedings, we were no longer related. Right?” 

 Dear Kelly,

That’s an interesting situation. And the right answer could be worth a lot of money to you.

You may want to appeal the IRS’s decision. I find that IRS staff often disallows large credits the first time, counting on the fact that people will not fight.

What do you have as an argument against your case? IRS rules with respect to dependents and related parties specifies that relationships that were created during a marriage, do not change after a marriage is ended.

What do you have in your favor? There’s nothing in IRS’s definition in Pub 17 of a child eligible for the adoption credit not being a step-child. Do you see something? I don’t. (There may be something in the Tax Code, perhaps?)

When they sent you their rejection letter, there were instructions on how to appeal your case. Follow the instructions, or get help.  If you have missed the 30-day deadline to respond, don’t worry. Wait for the next letter. That gives you 90 days to respond. During that time, file a Tax Court Petition and bring your case before the Court.

Do your homework. Dig through the Tax Court case archives and see what other adoption cases they have heard. Read the judges’ responses – they are very revealing about the Court’s decisions – and contain extensive references to the law and other cases.  Not only is it worth the trouble, if you do this research yourself, you’re going to have fun!

And remember, you can find answers to all kinds of questions about adoption credits and other tax issues, free. Where? Where else? At

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