After my partner gave birth to our wonderful daughter 4 years ago, we immediately began working with a lawyer on the second-parent adoption process. A second-parent adoption is the legal procedure through which the non-birth parent (me) may adopt the child of the biological parent. During the process, our lawyer mentioned that there is a tax credit granted to adopting parents. The one-time tax credit allows adoptive parents to seek “reimbursement” for the money spent on the adoption expenses. Because we are both lawyers, we spent some time researching the adoption credit and decided that it was risky as the IRS sometimes refused the use of the tax credit by same-sex couples when applied toward a second-parent adoption. So, we declined claiming the credit on our return that year.
But, as is true of all things related to same-sex couples right now - things are about to change. The Government Accountability Office criticized the IRS for its failure to properly train staff members on how to handle tax credits and second-parent adoptions. This lead to the unthinkable – the IRS admitted it made a mistake in not giving its auditors proper guidance on this issue.
What was the IRS’s reasoning behind denying the credit? One explanation it gave was that the birth mother does not terminate her parental rights as part of the adoption procedure. While that may be true, it is also irrelevant. There is nothing in the federal tax code that prohibits claiming the adoption credit for adopting a domestic partner’s child.
The IRS did explain that when the taxpayers in question pushed back on the issue, the taxpayers usually won - after spending money and time fighting the IRS. Hopefully, after this, those couples may spend time and money on more importants things: like daycare, diapers and life insurance premiums (until the day when a same-sex couples are granted the same benefits (social security survivor benefits or estate tax free inheritance) as other married automatically get upon marriage.
Of course, this issue would be moot if the nonbiological parent was given the right to be on the birth certificate in the first place. But, that’s a continuing fight for our future rights. As for now, I have one question:
Do we get to amend our 2007 tax return to get this deduction?