2/10/97
                                             IR-97-6


    IRS OFFERS SPECIAL ASSISTANCE FOR PARENTS ADOPTING A CHILD

     Washington -- Thousands of parents in the process of
adopting a child may be eligible for certain tax benefits on
their 1996 federal income tax return, even if they don't have the
taxpayer identification number for the child which Congress has
required because the adoption is not yet final.  To assist
parents who are adopting a child comply with newly enacted laws,
the Internal Revenue Service has set up a special temporary
procedure to allow them to claim the dependency exemption or
child care credit on their 1996 returns.
     Many adopting parents often have custody of a child for a
period of time pending final adoption, and they provide enough
financial support during the year to be entitled to claim the
dependency exemption or child care credit on their tax return. 
The law requires taxpayers to have valid identification numbers
for their children to be able to claim the exemption or credit --
generally a social security number (SSN), or an Individual
Taxpayer Identification Number (ITIN) in the case of nonresident
aliens.  However, parents cannot  get an SSN from the Social
Security Administration until after the adoption is final.
     Under the temporary procedures the IRS announced today,
parents in the process of a domestic U.S. adoption should write
"U.S. adoption pending" in the exemption section of their 1996
tax return inf the child's social security number.  In addition,
they should attach a copy of documentation from the adoption
agency or other legal authority to show that the child was placed
in the taxpayer's home for legal adoption.
     Internal Revenue Commissioner Margaret Milner Richardson
said, "We are pleased to offer a simple solution to adopting
parents so they can take advantage of the tax benefits relating
to dependents while they wait for the adoption process to be
complete."
     In the case of a foreign adoption, parents should obtain an
ITIN for their child from the IRS and use it until they can get
an SSN.  Parents can use Form W-7 to get an ITIN.
     Because recent tax law changes require the use of an SSN to
claim the earned income tax credit (EITC), these special
procedures do not allow adopting parents to claim the EITC for a
child placed with them for adoption.  To claim the EITC for a
prior year, however, parents may file an amended return after
they obtain an SSN for their child.
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