I started adoption in 2019 and in 2020 I deducted my first costs. Now I am trying to deduct my 2020 adoption expenditures but only 2019 can be entered. I have already deducted 2019 so how do I deduct 2020? The adoption is not final.
The adoption tax benefits provide an incentive for individuals or families to adopt an eligible child. The 2020 maximum dollar amount per eligible child is $14,300. If your expenses were spread over multiple years, you might be able to spread the credit over multiple tax returns (see Who Qualifies and What Adoption Expenses Qualify below).
Included in the tax benefits is 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's an exclusion from income for an approved employer-provided adoption assistance program.
To claim the adoption tax credit in TurboTax:
- Open or continue your return if it isn't already open.
- Search for adoption credit and select the Jump to link.
- On the Did you pay any adoption expenses in 2020 or earlier? or the Credit for Adoption Expenses screen, read the information and, if you qualify, answer Yes.
- Continue answering questions until you're finished.
An eligible child is:
- Any child under the age of 18. If the child turned 18 during the year, the child is an eligible child for the part of the year they were under 18.
- Any disabled individual mentally or physically unable to take care of themselves.
Regarding the adoption tax credit, keep in mind:
- If you've adopted the child of your spouse, you can't claim this credit.
- The credit usually isn't available if you are Married Filing Separately.
- Keep receipts for all qualified adoption expenses with your tax records.
Ok ... not sure how you deducted the 2019 expenses on the 2019 return ... that was a mistake if you did.
Since the adoption was not completed in 2020 then you can only use the 2019 expenses on the 2020 return ... there is always a 1 year delay. If the adoption is not completed in 2021 then the 2020 expenses would be deducted on the 2021 return. But if the adoption is final in 2021 then you get to deduct both the 2020 & 2021 expenses on the 2021 return. Read the rules : https://www.irs.gov/taxtopics/tc607