Adoption Tax Credit

Posted by Kate on February 9, 2014

What is the Adoption Credit?

If you adopted a child recently, qualified expenses related to the adoption have reverted back to being a nonrefundable tax credit. (The credit was refundable for tax years 2010 and 2011.) The tax adoption credit is a maximum of $12,970 per child for tax year 2013.

What Expenses Qualify?

Qualified expenses include:

  1. Reasonable and necessary adoption fees
  2. Court costs
  3. Attorney fees
  4. Traveling expenses (including amounts spent for meals and lodging while away from home), and
  5. Other expenses directly related to the legal adoption of an eligible child

What constitutes an “eligible” child?

An eligible child must be under 18 years old, or be physically or mentally incapable of caring for himself or herself. You may not claim an adoption credit or exclusion for a child who is not a US citizen or resident unless the adoption becomes final.

In what year should I file for the Adoption Credit?

For expenses paid prior to the year the adoption becomes final, the child adoption credit is generally allowed for the year following the year of payment. For expenses paid in and after the year the adoption becomes final, the credit is allowed in the year of payment.

Adoption Credit 2013 Income Limitations

The income limit on the adoption credit is based on your modified adjusted gross income (MAGI). If your MAGI is more than the $194,580 for 2013, your credit will be reduced. If your MAGI is above $234,580, you won’t qualify for the adoption tax credit.

Also, generally, if you are married, you must file a joint return to claim the federal adoption credit.

What form should I use to file?

Use Form 8839 to file for Qualified Adoption Expenses.

For more tax saving ideas for parents, see 10 Ways to Lower Your Taxes with Kids.



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