Tax Credits and Exclusions for Adoption
You can claim qualified adoption expenses on your tax return.
Qualified expenses include adoption fees, attorney fees, court costs and travel expenses, (including meals and lodging while away from home) along with other expenses directly related to the legal adoption of an eligible child.
Expenses that don't qualify
- expenses that violate state or federal law,
- expenses associated with the adoption of your spouse's child,
- expenses paid with funds received from any government program,
- expenses associated with surrogate parenting arrangements,
- expenses paid or reimbursed by an employer or someone else,
- expenses allowed as a credit or deduction under other federal income tax provisions.
You can claim the Adoption Credit and Exclude up to $11,390 for qualifying adoption expenses. This means you may be able to claim a credit of up to $11,390 and also exclude up to $11,390 from your income as long as you don't claim both a exclusion and credit on the same expense.
The credit and exclusion are reduced if your modified adjusted gross income is between $170,820 and $210,820. You may Not claim either one if your modified adjusted gross income is $210,820 or more.
If you're adopting a special needs child, you can claim the full credit regardless of the amount spent on adoption expenses. Check with your employer about assistance since some companies offer programs to reimburse a portion of adoption expenses.
The Adoption Credit is not available for any reimbursed expense, but certain amounts reimbursed by your employer for qualifying adoption expenses may be excluded from your gross income. You will need to claim the credit the year after you pay expenses or the year the adoption is finalized, whichever came first. Is your child eligible?
- The adopted child must be a U.S. citizen or resident at the time the adoption, a finalized adoption of a foreign or non-resident child.
- You must adopt an eligible child younger than 18, or the child must have special needs, be physically or mentally incapable of self care.
A state has determined that the child can't or shouldn't be returned to their parents' home and probably won't be adopted unless assistance is provided. States make this determination based on a variety of factors some of which include:
ethnic background the child's age the child's minority status whether the child has siblings if the child has a chronic medical condition if the child has an emotional or physical handicap.
In the case of a U.S. child, you can claim the credit even if your adoption of the child fails. However, if your adoption involves a foreign child, you can take the credit only if the adoption is finalized.
But remember, for foreign children, no credit may be taken unless the adoption is completed.