Adoption Tax Credit

Congress Makes Adoption Tax Credit Permanent


The Adoption Tax Credit that was set to expire at the end of 2012 is now a permanent credit. The tax credit allows adoptive parents of children from foster care to reduce the amount they owe in federal income taxes. In the case of an adoption of a U.S. child that a State has determined has special needs, you may be eligible for the maximum amount of credit even if you paid no qualified adoption expenses.

“As the 112th Congress came to a close, we secured several victories to help improve the lives of children living in the U.S. and around the world,” said U.S. Senator Mary Landrieu of Louisiana in an email sent on January 4 to adoption advocates. “The adoption tax credit, which I have long supported, was made permanent as part of the deal to avoid the fiscal cliff. Every child deserves a protective, loving family, and I hope that a permanent Adoption Tax Credit will enable many more families to open their hearts and homes to a child in need.”

What the Adoption Tax Credit Means for You

The adoption tax credit allows adoptive parents to deduct adoption expenses from their federal taxes such as necessary adoption fees, court costs, attorney fees, traveling expenses (including meals and lodging while away from home), and other expenses directly related to the legal adoption of an eligible child.

Tax benefits for adoption include both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion from income for employer-provided adoption assistance. The credit is nonrefundable, which means it is limited to your tax liability for the year. However, any credit in excess of your tax liability may be carried forward for up to five years. The maximum amount (dollar limit) for 2015 is $13,400 per child.

The Internal Revenue Service (IRS) has more information and required forms for claiming the adoption tax credit .

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