The 2019 Adoption Tax Credit
The Adoption Credit is a non-refundable tax credit - the amount of the tax credit is limited to the taxes due on the 2019 tax return. Any additional credit amount can be carried forward for up to five years. Let's say your credit is $2,000 and you owe $1,500 in taxes for 2019, you can apply the remaining $500 on your 2020 tax return. On a 2019 tax year return the maximum adoption tax credit amount is $14,080 per eligible child.
The tax credit is designed to help parents with the expenses related to adopting a child under the age of 18 (including a child with special needs). You can include your adoption expenses on Form 8839 when you start a free tax return on eFile.com, and the credit will automatically be calculated and reported for you on your eFile.com tax return.
You can qualify for the Adoption Tax Credit if one or more of the following statements are true:
- The child is a U.S. citizen or resident (or a U.S. citizen with special needs) on or before December 31 of the tax year.
- If the adoption becomes final, you claim the credit for a non U.S. citizen or foreign resident. If the child has special needs and the state determines that the child would not be adopted without assistance, then you may be eligible for an increased tax credit.
- You paid qualified adoption expenses (see below for examples) related to adopting a U.S. child (including children with special needs) in either: a) 2018 and the adoption was not final at the end of 2018 or b) 2019 and the adoption became final in or before 2019.
- You adopted a U.S. child with special needs and the adoption became final in 2019. You may be able to claim the credit even if you did not pay may adoption expenses.
- A registered domestic partner may pay the adoption expenses in some cases. For example, if both parents live in a state that allows a same-sex second parent or co-parent to adopt their partner's child, these may also be considered qualified expenses.
- You paid adoption expenses connected to the adoption of a foreign child in either: a) 2019 or a prior year and the adoption became final in 2019 or b) 2019 and the adoption became final before 2019.
- You have an adoption credit carry forward from 2018.
Qualified Adoption Expenses
Qualifying expenses include the following:
- adoption fees
- court costs
- attorney fees
- traveling expenses (including meals and lodging while away from home)
- other expenses directly related to the adoption of an eligible child
Expenses do not include:
- Any expenses you received under any federal, state, or local program
- Those that violate federal or state law
- Those that carry out a surrogate parenting arrangement
- Those related to the adoption of your spouse's child
- Those reimbursed by your employer
- Those allowed as a deduction or credit under any other federal income tax law or other provision
Any expenses that were previously reimbursed by your employer may not be counted towards the credit. However, there may be qualified expenses paid by your employer that can be excluded from your taxable income.
You can also claim the Adoption Credit for most foreign or domestic adoptions. However, the timing rules for which expenses can be claimed vary between domestic and foreign adoptions:
- Domestic Adoption - Qualified adoption expenses paid before the year the adoption becomes final are allowable as a credit for the tax year following the year of payment (even if the adoption is never finalized).
- Foreign Adoption - Qualified adoption expenses paid before and during the year are allowable as a credit for the year when the adoption becomes final.
2019 Adoption Credit Amount
For Tax Year 2019, the maximum adoption credit is $14,080 per child. The credit for qualifying adoption expenses is subject to a dollar limit and an income limit. The income limit is based on your modified adjusted gross income (AGI). If your income is above the AGI limit, it may be reduced by a certain percentage or, if above the maximum limit, the credit may be eliminated in its entirety. The amount begins to phase out if your AGI is over $211,160, and it is completely phased out if your income is $251,160 or higher.
Due to The Affordable Care Act, income limits for the Adoption Credit will be adjusted for inflation. You can save any unused portion of your credit and carry it forward to reduce your tax for up to 5 years.
For Tax Year 2018, the maximum adoption credit was $13,840 per child.
How To Claim the Adoption Tax Credit
The Adoption Tax Credit can be claimed on a tax return by any qualifying taxpayer with a filing status of Married Filing Joint, Qualifying Widow(er), or Head-of-Household by using Form 8839, Qualified Adoption Expenses. When you prepare and e-File your tax return on eFile.com, you can enter your adoption expenses and we will automatically prepare and report your Adoption Tax Credit on Form 8839 and it will be e-Filed with your return.
If you are married, you must file a joint return to claim the adoption credit. If you filed using the filing status of Married Filing Separately, you can take the credit only if you amend your return and change it to the Married Filing Joint status in the years that you wish to claim the credit.
Due to increased documentation requirements by the Affordable Care Act, some taxpayers claiming the Adoption Tax Credit might have to file their return by mail. You must include one or more adoption-related documents with your mailed tax return. You can still use eFile.com to prepare and print your return, however you will need to mail a paper copy to the IRS. It is easy to print a completed return from your eFile.com account.
Please read IRS Publication 17 for more details on the Adoption Tax Credit.
See what other tax credits and tax deductions you might qualify to claim on your tax return.
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