Adoption Credit

(redirected from Adoption Credits)

Adoption Credit

In U.S. tax law, a direct dollar-for-dollar reduction in one's tax liability for each child under the age of 18 that a taxpayer adopts. The adoption credit is intended to reimburse the taxpayer for attorney's fees, court costs, and traveling expenses. The credit is non-refundable, but if the amount of the credit exceeds one's tax liability, it may be carried forward for up to five years. The maximum amount of the adoption credit is adjusted for inflation. See also: Carryforward.

Adoption Credit

A nonrefundable credit for qualified adoption expenses incurred for each eligible child. The limit on the credit is indexed to inflation. For current figures, see our Adoption Assistance rate table. The limit is a per-child limit, not an annual limit. Any unused credit can be carried forward for five years or until used. For special needs children the full credit is allowed, regardless of the amount of actual expenses.
References in periodicals archive ?
Consequently, because 1997 is the first year in which qualifying expenses may _be paid or incurred, adoption credits would be allowed in 1997 only for adoptions that were finalized during that tax year.
Beginning January 1, 1997, per IRC section 23 (replacing the repealed section 23, Residential Energy Credit), taxpayers are allowed to claim an adoption credit against their Federal income tax liability of as much as $5,000 for qualified adoption expenses for each eligible child.
Like many other tax benefits, both the income exclusion and the adoption credit are subject to an income limitation and are phased out for high-income taxpayers - in this case, those with a modified adjusted gross income (AGI) between $75,000 and $115,000.
Expenses that are covered under an employer adoption assistance program cannot be used a second time to qualify for the adoption credit.
Because the adoption is not finalized in 1997, the couple is unable to use those expenses to claim the adoption credit until 1998.
In this case, the couple must reduce their adoption credit as follows: the $20,000 excess (AGI over $75,000) is divided by $40,000 as required by law.
The most often missed deductions are: student loan interest, mortgage points, health insurance premiums for the self-employed, adoption credits and child-care credits.

Full browser ?