You Can Claim an Adoption Tax Credit to Help Offset Expenses if You Adopted a Child in 2018

the Adoption Tax Credit covers up to $13,840 in qualifying adoption expenses

Have You Adopted a Child? Find Out How Adoption Affects Your Taxes
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January 8, 2019

If you adopted a child in 2018, you probably had to spend a lot of money to do it. Child adoption is an expensive and fulfilling journey, and the Adoption Tax Credit is there to help you offset some of the costs involved in the adoption process. The Adoption Tax Credit can give new parents up to $13,840 in a tax credit for each qualifying adopted child.

Criteria for Claiming the Credit

The maximum amount that you can claim per eligible child is $13,840, but you can only claim up to the actual amount of money you spent during the process. If your modified adjusted gross income is more than $207,580, the amount of your credit will be lower. You will not be able to receive the credit if your income is $247,580 or higher.

Children have to be under age 18 to be eligible, though they can be older if they are unable to care for themselves physically or mentally. You can qualify as long as you did not receive reimbursement from any other parties, such as an employer or state-governed agency.

The only expenses that you can claim toward the credit are those directly related to legally adopting a child, such as court costs, attorney's fees, traveling expenses and traveling expenses when away from home.

Claiming the Credit for Special Needs

If the child you adopted meets the federal government's definition of a child with "special needs," you are allowed to claim the maximum amount of the credit regardless of what you spent during the adoption process.

In this instance, the child has to meet all the following requirements:

  • Must be a citizen or resident of the U.S.
  • Must not or cannot be returned to the home of the birth parents
  • Would likely never have been adopted without some form of financial assistance

Remember that the Adoption Credit can only be applied once. It applies only for the tax year in which you went through the adoption process and experienced the related expenses. It cannot be claimed for any year after the adoption because the child is considered your dependent from that point onward.

Claiming the Credit for an Unsuccessful Adoption

Unfortunately, there are times when adoptive parents are unsuccessful in adopting a child. If this applies to you, you can claim the expenses incurred during the process up to the maximum amount.

Filing a Return for the Adoption Credit

Although most people now file their returns electronically, adoptive parents planning to claim the Adoption Tax Credit still have to file a paper return with Internal Revenue Service (IRS) Form 8839. This is because you have to submit a formal adoption certificate that has been signed by a judge. If you file under special needs criteria, you will have to submit documentation issued by the state and/or county to that effect.

This information is not tax or legal advice

This information is being presented for educational purposes. It is not, nor is it meant to be, tax or legal advice. For assistance, consult with a tax advisor, attorney, or the IRS.