The Adoption Tax Credit Explained: How to Maximize Your Tax Benefits

TLDRThe adoption tax credit allows taxpayers who have adopted a child to deduct up to $14,300 per eligible child. The credit is limited to qualified adoption expenses, which include adoption fees, court costs, and attorney fees. There are income limits and a phase-out range for the credit. The credit can be claimed in the year the adoption is finalized or in later years if expenses were paid or incurred.

Key insights

🧑‍👩‍👦‍👦Taxpayers who have adopted a child can claim the adoption tax credit, which can provide significant tax benefits.

💰The maximum adoption tax credit per eligible child is $14,300, but the actual amount depends on qualified adoption expenses and the taxpayer's income.

📅The adoption tax credit can be claimed in the year the adoption is finalized or in later years for qualified expenses incurred.

🌐The adoption tax credit is subject to income limits and a phase-out range. Taxpayers with higher incomes may not qualify for the credit.

🤝Taxpayers who receive employer-provided adoption benefits may have limitations on the amount of qualified expenses they can claim for the adoption tax credit.

Q&A

What are qualified adoption expenses?

—Qualified adoption expenses include adoption fees, court costs, and attorney fees related to the legal adoption of an eligible child.

Can the adoption tax credit be claimed for the adoption of a child from another country?

—Yes, the adoption tax credit can be claimed for both domestic and international adoptions, as long as the child qualifies as an eligible child.

Is there a limit to the number of eligible children for the adoption tax credit?

—No, there is no limit to the number of eligible children for the adoption tax credit. However, the maximum credit per eligible child is $14,300.

Are there income limits for claiming the adoption tax credit?

—Yes, there are income limits for claiming the adoption tax credit. The credit begins to phase out for taxpayers with modified adjusted gross income (MAGI) above a certain threshold, and it is completely phased out for taxpayers with MAGI above another threshold.

Can adoption expenses be claimed in the year before the adoption is finalized?

—No, adoption expenses can only be claimed in the year the adoption is finalized or in later years for expenses incurred.

Timestamped Summary

01:17The adoption tax credit allows taxpayers who have adopted a child to deduct up to $14,300 per eligible child.

02:22Qualified adoption expenses include adoption fees, court costs, and attorney fees related to the legal adoption of an eligible child.

05:26The adoption tax credit is subject to income limits and a phase-out range. Taxpayers with higher incomes may not qualify for the credit.

06:01The adoption tax credit can be claimed in the year the adoption is finalized or in later years for qualified expenses incurred.

09:58Taxpayers who receive employer-provided adoption benefits may have limitations on the amount of qualified expenses they can claim for the adoption tax credit.

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