- What is the Adoption Tax Credit?According to the IRS, “The adoption tax credit offsets qualified adoption expenses, making adoption possible for some families who could not otherwise afford it. Generally, you may qualify for the adoption credit if you adopted a child and paid qualified expenses relating to the adoption. If you attempt to adopt a U.S. child, you may be able to claim the credit even if the adoption does not become final.”
- What if I have qualified expenses for an adoption that is never finalized?The Adoption Tax Credit is available for a completed or an interrupted adoption. This can help with the financial risk inherent in most adoption plans.
- What is a Qualified Expense?A qualified expense includes attorney or agency fees, court costs, traveling expenses (including amounts spent for meals and lodging while away from home), and other expenses directly related to the legal adoption.
- What if I cannot claim the entire Adoption Tax Credit because I did not pay enough tax in that year?You may carry any unused credit forward up to five tax years.
- Do I need a tax advisor?Not necessarily. You can find the forms needed at the IRS website. You will need to apply for an Adoption Taxpayer Identification Number and complete IRS Form 8839. In the event you are audited, you will be glad you have saved your receipts and invoices to document all qualified expenses.
http://www.irs.gov/Individuals/Adoption-Taxpayer-Identification-Number http://www.irs.gov/taxtopics/tc607.html Adoption Tax Credit 2015. From: IRS Rev. Proc. 2013-35 Adoption Credit. For taxable years beginning in 2015, under § 23(a)(3) the credit allowed for an adoption of a child with special needs is $13,400. For taxable years beginning in 2015, under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,400. The available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $201,010 and is completely phased out for taxpayers with modified adjusted gross income of $241,010 or more. (See sections 3.18 and 3.19 of this revenue procedure for the adjusted items relating to adoption assistance programs.) Contact Stuart & Blackwell