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The Adoption Credit is a non-refundable tax credit available for qualified adoption expenses.
The credit can be used to exclude employer-provided adoption benefits from income or to take a tax credit for out-of-pocket expenses paid.
Requirements to Claim Credit
- The qualifying child must be 18 years or younger or must be physically or mentally incapable of caring for themselves.
- Your filing status is single, head of household, qualifying widow(er), married filing jointly, or married filing separately. If your filing status if married filing separately, the following must be true:
- You lived apart from your spouse during the last 6 months of the year.
- The eligible child lived in your home for more than half of the current tax year.
- You provided over half the cost of keeping your home.
- You meet all other requirements.
- Your modified adjusted gross income (MAGI) is less than $204,410.
- You are able to report the eligible child's name, year of birth, and identifying number.
- You meet at least one of these conditions:
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- The adoption expenses were paid in the prior tax year, but the adoption was not final that year.
- The adoption expenses were paid in the current tax year and the adoption was final in or before the current tax year.
- The adoption of a special needs child was final in the current tax year.
- The adoption expenses were paid after 1996 and the child is a foreign eligible child whose adoption became final in the current tax year.
- You have a carryforward of unused adoption credit from a prior year.
Qualified adoption expenses include expenses that are reasonable and necessary in order to adopt the eligible child:
- Adoption fees
- Court costs
- Attorney fees
- Travel expenses while away from home
- Re-adoption expenses related to adoption of a foreign child
- Expenses in connection with surrogate parenting
- Expenses incurred to adopt the child of the taxpayer's spouse
- Expenses reimbursed by your employer or other organization
- Expenses violating federal or state law
- Any child under age 18. If the child turned 18 during the year, the child is considered eligible for the part of year they were under age 18.
- Any physically or mentally disabled person unable to take care of themselves.
Employer Provided Benefits
If your employer provides an adoption assistance program you may be able to exclude from income the expenses paid on your behalf.
The expenses must be paid directly to you or a third party for qualified adoption expenses. Employer-provided adoption benefits may reduce your salary and are generally reported in Box 12 of your W2.
Income Limitations
The amount of the adoption credit is reduced or eliminated if your modified adjusted gross income (MAGI) exceeds pre-set limits.
- The credit is reduced when your MAGI exceeds $170,820 and is eliminated when your MAGI is greater than $210,820.
- The maximum amount of credit is $11,390.
- The credit may be carried forward for up to 5 years or until all of the credit has been used, whichever comes first.
- Carryforward credits are not subject to MAGI limitations.
To take the credit or exclusion, complete Form 8839 and attach the form to your Form 1040 or Form 1040A.
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