Qualifying Adoption Expenses
The tax credit for adoption applies for all qualified adoption expenses (including court costs, attorney’s fees, other expenses directly related to the adoption process) for the legal adoption of an eligible child.
You can claim an amount of up to $ 12,150 on your tax return for your qualifying child adoption expenses. An eligible child must be under 18 years old or mentally and physically unable to take care of himself.
Exclusion For Qualified Adoption Expenses
If your employer pays for a part of the qualifying adoption expenses, this may be excludable from your adjusted gross income.
There are two limits for the tax credit for adoption and the exclusion: the dollar limit and the income limit.
The Dollar Limit
The amount of credit or exclusion is limited to the dollar limit for that year. For example, if the dollar limit for that year is $10,000 and you are subject to receive a federal adoption credit of $ 8,000, while your employer pays $ 3,000 for adoption assistance, you may be able, under certain circumstances, to receive $8,000 credit for your adoption expenses. The additional qualifying adoption expenses of $3,000, paid by your employer may be excluded.
The Income Limit
The income limit on your adoption costs is based on modified adjusted gross income. For instance, if your modified adjusted gross income is above the maximum phase out amount for the year, you cannot qualify for an adoption credit or exclusion.
The Adoption Credit Is Nonrefundable
You can use the tax credit for adoption to offset the alternative minimum tax.
