How do I claim the adoption tax credit?

How do I claim the adoption tax credit?

Best Answers

  • Answer ✓
    In order to claim the adoption tax credit you must have incurred qualified adoption expenses, including court costs, adoption fees, travel, and more in process of adopting a child 18 years and younger. Make sure to check with your accountant for the specific list that qualifies for the tax credit. The tax credit also is claimed the year AFTER the expenses are claimed. For example, our son was born in August of 2014. He was legally adopted in 2015, so we claimed the tax credits in 2015. Also, for the Federal tax credit, they can be claimed whether your adoption was successful or not. We had a failed adoption in 2016 and were able to "recoup" some of our expenses via the Federal tax credit in 2017.

    The great thing about the Federal tax credit is that it is a tax refund for any amount of tax you paid in for the year that you are claiming the credit. For example, if you had paid in $10,000 in taxes, you would receive that full amount back in the form of a tax refund, and still have a remaining $3,840 (for 2018) to claim the following year.

    If you need more information, you can check out this link
  • Answer ✓
    The information listed above is exactly right! However, I did want to mention a few things that we experienced in trying to claim the credit. The good news is that the tax software we used to do our taxes led us through the process of claiming the credit. The bad news is that the second year we used a professional CPA, and he completely missed the credit! Unfortunately even professionals are not often sure how to credit the adoption expenses or how much. We specifically used a professional for this purposes.

     If you get your taxes done by a professional, make sure that it is someone well versed in the credit. Also remember that you can claim everything adoption related that qualifies! You can see a list of qualifying expenses here. These expenses can include but are not limited to agency fees, birth mother expenses, travel, food while traveling etc. 

    Another thing to note about claiming the credit is to make sure your tax professional checks to make sure there is not also a state adoption credit available to you. We were able to deduct a credit from federal and from our state in Ohio. It is also important to become well-versed in what amount will be carried over from the next year. Keep records of everything! We had our tax professional highlight the amount that would be carried over so that we could make sure not to miss it if we did not use that same professional the following year.

    The tax credit is incredibly beneficial for those who need to recoup some of the money they paid towards adoption. Though this is not a refund and only goes towards tax liability, it has the ability to save money either way! For more information, you can check out our handy guide from Adoption.com here
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