For qualified adoption expenses in a domestic adoption, the credit is taken the year following the payment of expenses.
These credits are allowable for the tax year following the year of payment even if the adoption is never finalized.
So the expenses from 2015 could be taken on an amended 2016 return, and any qualified expenses in 2016 can be taken on your 2017 return. Your expenses for 2017 will be taken on your 2018 return when adoption is finalized.
The Qualified Adoption Expenses defined in section 23(d)(1) are:
- Reasonable and necessary adoption fees,
- Court costs and attorney fees,
- Traveling expenses (including amounts spent for meals and lodging while away from home), and
- Other expenses that are directly related to and for the principal purpose of the legal adoption of an eligible child.
