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.

Mentioned in

Qualified Adoption Expenses

References in periodicals archive

In July, 1975, under Presidential Decree (PD) 775, President Marcos ordered the Philippine Coconut Authority (PCA) to "formulate and recommend for adoption credit policies affecting production, marketing, and processing of coconut and other palm oils" and "to provide readily available credit facilities to the coconut farmers at preferential rates."

Second attempt

There were proposals to repeal the adoption credit and the exclusion for adoption assistance, as well as the exclusion for dependent care assistance, but they were not included in the final law.

First Look at the Tax Cuts and Jobs Act: The Impact on Individuals at Different Stages of Life

The adoption credit became refundable for the first time in 2010.

Individual income tax returns, preliminary data, 2010

In 2012, B finalized the adoption of A's baby, claimed an adoption credit, and claimed the baby as a dependent on her return.

Retroactive tax planning after Windsor

Current tax credits include the credit for child and dependent care expenses, education credits, the foreign tax credit, the retirement savings contributions credit, the child tax credit, the adoption credit, the plug-in electric vehicle credit, and residential energy credits.

Tax credit or income transfer? It is a good thing when taxes are reduced. But when refundable tax credits provide taxpayers with more money than they paid in, that's a subsidy, not a tax cut

Families wishing to claim the adoption credit should visit www.irs.gov, key word "Adoption Credit," for more information.

Siblings could gain with team approach

The Government Accountability Office was recently asked to describe the IRS strategy for ensuring compliance with the adoption credit for the 2011 filing season, assess the IRS related communication with taxpayers and stakeholders, and assess its processing and audit of claims.

Adoption tax credit: GAO says the IRS can reduce audits and refund delays

By contrast, the full amount of the adoption credit is allowed to taxpayers adopting a special needs child regardless of the amount of qualified adoption expenses paid by the taxpayer.

Revisiting tax benefits for parents of children with special needs, part 2

Usually, the only nonrefundable personal credits that can be used to offset both regular tax and AMT liability are the child tax credit, the adoption credit, and the retirement savers credit.

Another patch for the AMT

Those most common to military taxpayers are the Hope and Lifetime Learning Credit, (50) Adoption Credit, (51) Additional Child Tax Credit, (52) and the Earned Income Credit.

Update for 2007 federal income tax returns