The tax benefits are a nonrefundable tax credit. This is a dollar-for-dollar reduction in the amount of federal taxes owed (tax liability) for the year. You won't get a refund if the tax credit is more than your total tax owed for the year. However:
- Any credit in excess of your tax liability may be carried forward for up to five years.
- There is an exclusion from income for an approved employer-provided adoption assistance program.
Who qualifies for the credit?
Usually, the credit is permitted whether the adoption is domestic or foreign. However, the timing rules for claiming the credit for qualified adoption expenses are different, depending on the kind of adoption.
- A domestic adoption is the adoption of a U.S. child (an eligible child who is a citizen or resident of the U.S. or its possessions before the adoption begins). Qualified adoption expenses paid before the year the adoption becomes final are permitted as a credit for the tax year following the year of payment (even if the adoption is not finalized and even if an eligible child was never identified)
- A foreign adoption is the adoption of an eligible child who is not yet a citizen or resident of the U.S. or its possessions before the adoption effort begins. Qualified adoption expenses paid before and during the year are permitted as a credit for the year when it becomes final.
- You have a carryforward of an adoption credit from 2021.
- You may receive less than the full amount if some of your adoption expenses are covered by an employer plan or your modified adjusted gross income (MAGI) is over $223,410 (and is phased out at $263,410) for 2022.
What adoption expenses qualify for the credit?
Expenses which qualify for the adoption credit include:
- Adoption fees
- Attorney fees
- Home studies by an authorized placement agency
- Court costs
- Travel expenses including meals and lodging while away from home.
- Visas and re-adoption expenses for a foreign child
To claim the adoption tax credit in TurboTax
Regarding the adoption tax credit, keep in mind:
- If you have adopted the child of your spouse, you cannot claim this credit.
- The credit usually is not available if you are Married Filing Separately
- Keep receipts for all qualified adoption expenses with your tax records.
From <https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/claim-adoption-cr...>
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