If you entered your qualified adoption expenses, but don't see a credit on your return, check these limitations to confirm whether you qualify for the Adoption Credit this year:
Income limit: in 2023, families with a modified adjusted gross income below $239,230 with qualified expenses can claim full credit. Those with incomes from $239,230 to $279,230 can claim partial credit, and those with incomes above $279,230 cannot claim the credit.
Nonrefundable Credit limit: The adoption tax credit is non-refundable. This means it can be used to reduce a tax bill but won't result in a refund, even when the amount of credit is greater than the tax bill.
Limit per eligible child: $15,950.
However, a taxpayer can carry their leftover credit forward and apply it to future tax returns for up to five years.
To enter the expenses in TurboTax Online:
- Open or continue your return if it isn't already open.
- Search for adoption credit and select the Jump to link, or find it in the list under Deductions and Credits, You and Your Family.
- On the "Did you pay any adoption expenses in 2023 or earlier?" or the "Credit for Adoption Expenses" screen, read the information and, if you qualify, answer Yes. This includes carryovers from prior years.
- Continue answering questions until the section is completed.
The adoption tax benefits provide an incentive for individuals or families to adopt an eligible child. The 2023 maximum dollar amount per eligible child is $15,950. If your expenses were spread over multiple years, you might be able to spread the credit over multiple tax returns.
You shouldn't have to provide info that doesn't exist, such as the child's date of birth or SSN in the case of failed adoptions. TurboTax developers have worked on this situation in the program. You should be able to claim the adoption credit without being required to list a specific child's name and other information on the form in the case of a failed adoption attempt. This matches the IRS instructions saying that those fields can be left blank if you do not have the information. See this thread for another discussion of the issue. There may still be a flag on the screen asking for missing information, but you can proceed with claiming the credit without entering the info being flagged. Click Continue a second time and the program should proceed.
From IRS Tax Topic 607:
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 territories before the adoption effort begins). Qualified adoption expenses paid before the year the adoption becomes final are allowable as a credit for the tax year following the year of payment (even if the adoption is never finalized and even if an eligible child was never identified).
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