Qualified adoption expenses (defined in section 23(d)(1) of the IRC) include:
- 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.
The expenses you listed are good. (Travel expenses, application expenses, Homestudy expenses, Homestudy renewal expenses).
You claim the expenses in the year you incurred them or the year the adoption is finalized-- so you can claim the 2015 expenses in 2016, but you can claim the 2016 expenses only if the adoption is final.
Two important things to realize is all expenses apply to the max credit allowed and it is a nonrefundable credit so it can only be used to reduce your tax liability. If there is any unused credit, you can carry it forward up to five years
The grants and paypal are not taxable income because they are gifts, but you would have to reduce any expenses claimed for the credit by the amount paid by the grant.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
