Adoption Tax Credit

Adoptive parents may qualify for an adoption tax credit.  The maximum amount of the adoption credit for the year 2015 is $13,400 per eligible child (up from $13,190 in 201). Currently the adoption tax credit is a nonrefundable credit, meaning that it is only allowed to the extent of the taxpayer's tax liability for the year.  To the extent the adoption credit exceeds the amount of the tax liability for the year, the excess amount of the credit can be carried forward up to the fifth year following the taxable year in which the credit arose.

How to qualify

There are two ways to qualify for the adoption tax credit:

Out of pocket expenses:

You may claim an adoption credit for the amount of out of pocket expenses related to the qualified adoption expenses directly related to the adoption including adoption fees, attorney fees, court costs and travel expenses. You may not claim expenses reimbursed by your employer or any other person or organization.
Special needs child:Adoptive parents of a special needs child may claim the full adoption credit in the year the adoption is finalized, even if the taxpayer paid or incurred no out of pocket expenses.


When credit is not available?:

The credit is not available when the child is adopted in the following areas:

Step-parent adoption;
Surrogate arrangement; or
Adult adoption, unless the adult being adopted is "physically or mentally incapable of caring for himself".

 

Documents necessary to claim tax credit:

The IRS may request the final adoption decree, placement agreement from an authorized agency, court documents, and the state's determination that the child has special needs.

Adoption credit resources:  You can find more information here.