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 ?
Beginning January 1, 1997, per IRC section 23 (replacing the repealed section 23, Residential Energy Credit), taxpayers are allowed to claim an adoption credit against their Federal income tax liability of as much as $5,000 for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. Therefore, $5,000 in adoption expenses paid by an employer under an assistance program and excluded from the taxpayer's income could not also be used to claim the adoption credit.
Qualified expenses for purposes of the adoption credit are allowed in the tax year following the tax year during which the expense is paid or incurred except for 1) the year the adoption becomes final and 2) adoption of a child who is not a U.S.
Because the adoption is not finalized in 1997, the couple is unable to use those expenses to claim the adoption credit until 1998.

Full browser ?