Alicia Sisk Morris CPA | Top 10 Facts about the Adoption Tax Credit

Top 10 Facts about the Adoption Tax Credit

10 Mar Top 10 Facts about the Adoption Tax Credit



Working as a CPA (Certified Public Accountant) in the greater Asheville – Western North Carolina area I am blessed to learn about various aspects of my client’s financial life.  One of the major factors affecting a tax payer is the addition of a child whether it is by birth or adoption.  Adoption holds a special place in my heart as my mother worked as a social worker for 20 years assisting families in adopting children.  I love hearing about those special adoption stories and I so deeply respect a family’s choice to open their homes and adding another member to their family.

When you adopt a child, there are additional and special tax considerations to take into account when calculating the Adoption Tax Credit.  Below are the top ten facts per the Internal Revenue Service (IRS).  If I can be of further assistance to you regarding your adoption credit, please let me know.  I can be reached in both my Weaverville and my new downtown Asheville office.


Top Ten Facts about the Adoption Tax Credit

If you adopted or tried to adopt a child in 2015, you may qualify for a tax credit. Here are ten things you should know about the adoption credit.

1. Credit or Exclusion. The credit is nonrefundable. This means that the credit may reduce your tax to zero. If the credit is more than your tax, you can’t get any additional amount as a refund. If your employer helped pay for the adoption through a written qualified adoption assistance program, you may qualify to exclude that amount from tax.

2. Maximum Benefit. The maximum adoption tax credit and exclusion for 2015 is $13,400 per child.

3. Credit Carryover. If your credit is more than your tax, you can carry any unused credit forward. This means that if you have an unused credit in 2015, you can use it to reduce your taxes for 2016. You can do this for up to five years, or until you fully use the credit, whichever comes first.

4. Eligible Child. An eligible child is an individual under age 18 or a person who is physically or mentally unable to care for themself.

5. Qualified Expenses. Adoption expenses must be directly related to the adoption of the child and be reasonable and necessary. Types of expenses that can qualify include adoption fees, court costs, attorney fees and travel.

6. Domestic or Foreign Adoptions. In most cases, you can claim the credit whether the adoption is domestic or foreign. However, the timing rules for which expenses to include differ between the two types of adoption.

7. Special Needs Child. If you adopted an eligible U.S. child with special needs and the adoption is final, a special rule applies. You may be able to take the tax credit even if you didn’t pay any qualified adoption expenses.

8. No Double Benefit. Depending on the adoption’s cost, you may be able to claim both the tax credit and the exclusion. However, you can’t claim both a credit and exclusion for the same expenses. This rule prevents you from claiming both tax benefits for the same expense.

9. Income Limits. The credit and exclusion are subject to income limitations. The limits may reduce or eliminate the amount you can claim depending on the amount of your income.

10. IRS FORMS  File Form 8839, Qualified Adoption Expenses, with your Form 1040.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on

Issue Number: IRS TAX TIP 2016-37

  • Faylinn
    Posted at 13:14h, 13 May Reply

    My husband and I just started the adoption process and have been surprised by all the work that goes into it all. I know that the average adoption in the United States costs about $20,000, especially if it is foreign. However, the process could also take up to two years as well and so it is very good for us to know about the credit carryover aspect. However, should we be putting all the costs that go into the adoption every year for the credit even if it takes more than a year to be able to adopt?

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