Taxpayers who adopted or started the adoption process in 2023 may qualify for the adoption credit. This credit can be applied to international, domestic, private and public foster care adoption.
Here is some basic information to help people understand this credit and whether they can claim it when they are filing their taxes:
- The maximum adoption credit taxpayers can claim on their 2023 tax return is $15,950 per eligible child.
- There are income limits that could affect the amount of the credit.
- Taxpayers should complete Form 8839, Qualified Adoption Expenses, to figure how much credit they can claim on their tax return.
- An eligible child must be younger than 18. If the adopted person is older, they must be unable to physically take care of themselves.
- This credit is non-refundable. This means the amount of the credit is limited to the taxpayer’s taxes due for 2023. Any credit left over from their owed 2023 taxes can be carried forward for up to five years.
- Qualified expenses include:
- Reasonable and necessary adoption fees.
- Court costs and legal fees.
- Adoption related travel expenses like meals and lodging.
- Other expenses directly related to the legal adoption of an eligible child.
- In some cases, a registered domestic partner may pay the adoption expenses. If they 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.
- Expenses may qualify even if the taxpayer pays them before an eligible child is identified. For example, some future adoptive parents pay for a home study at the beginning of the adoption process. These parents can claim the fees as qualified adoption expenses.
- Taxpayers who adopt their spouse’s child can’t claim this credit.
Adoptive parents: Don’t forget about the Adoption Tax Credit