BarbL
Employee Tax Expert

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With foreign adoptions, the credit is taken in the year the adoption becomes final.  So, no need to amend your 2017, as everything will be claimed on your 2018 tax return, even if paid in a prior year.  The 2018 Adoption Credit is $13,840, and it is per child (as opposed to per year). 

 

Keep in mind that the Adoption Credit can only offset your actual tax liability in a given year.  Any additional unused credit can be carried forward and offset tax liability for five years.  As an example, even though your total expenses were $40k., you will receive a credit of $13,840 to offset your tax liability dollar-for-dollar.  If your 2018 income produces a $7,000 tax liability, that will be zeroed out completely and the remaining $6,840 will be available to offset your 2019 tax liability.  Any credit not used in the 5-year carryforward period will be lost.  

If your employer provided any adoption assistance benefits, those reimbursements are nontaxable as long as the reimbursement plus the credit is not more than your actual expenses. (You can't exclude the reimbursements, then use them to apply for a credit.)

 

If your income exceeds $203,540 (2017 amount), you may lose some or all of your credit/exclusion.

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