What is the Adoption Tax Credit?
The Adoption Tax Credit is available to parents who have incurred qualifying expenses in the adoption of a child.
Do all adoptions qualify for the Adoption Tax Credit?
In order to claim the Adoption Tax Credit, expenses must have been incurred for the adoption an eligible child. An eligible child must meet the following requirements:
- Has not reached the age of majority (18) or cannot care for himself, either physically or mentally.
- Must be a United States citizen or resident, unless the adoption has become final.
If a child has special needs, you may be able to claim more qualified expenses toward the credit.
Additionally, note that the credit is phased out as adjusted gross income level rises.
What expenses qualify under the Adoption Tax Credit?
The types of expenses that usually qualify for the Adoption Tax Credit include, but are not limited to, the following:
- Adoption fees
- Attorney fees
- Court costs
- Travel, food, lodging expenses
- Other expenses directly related to the adoption
Any expenses that have been reimbursed do not qualify for the credit; that said, if your employer reimbursed you for any adoption-related costs, you may be able to exclude that amount from your gross income.
When can I take the Adoption Tax Credit?
Usually the credit is claimed in the year following the one in which expenses were paid; however, if expenses were paid and the adoption becomes final in the current year, it is possible that the credit may be allowed in the current year. Whether you may take the credit in the current tax year or the year following the one in which expenses were paid depends on your precise situation, so it is advisable to consult with a tax attorney or other tax professional on this.
Are there monetary limits on the Adoption Tax Credit?
Yes, and they change with some frequency. You can stay up to date on this issue by reading IRS Tax Topic 607: Adoption Credit.
How do I take the Adoption Tax Credit?
You will need Form 8839 (PDF), Qualified Adoption Expenses, to attach to your Form 1040 or 1040A.
As always, it is best to consult with an experienced tax attorney or other tax professional regarding your personal, unique circumstances.