relocation boosted MAGI: adoption credit carry forward to next year with lower MAGI ?

[dlpanak2]

Hi,

The attorney for our adopted son said that CPS had classified him as "special needs" and that the full $14k adoption credit was available to us in 2019.  However, we relocated the same year, and my company gave a large relocation benefit, which placed our MAGI into the partial exclusion category for the credit.  My wife an i also have adoption credit carry forward to 2019 for three of our son's siblings adopted in 2018.

My income will be lower in 2020, and below the MAGI limit for the credit.  Will that excluded credit carry forward to 2020 along with the unused credit, or would it be better to not take the credit at all for 2019 so as not to 'lose' what would have been excluded credit?

Thanks very much for the help!!!

[ThomasM125 · Accepted solution]

The adoption credit carry forward from previous years will be available to offset your income tax in 2019. However, if your adoption credit for 2019 is excluded because your income is too high, you will lose that credit and it will not be available to offset your taxes in future years.

Whether or not you report the 2019 adoption on your tax return, it will not affect your ability to claim the benefits of the carryover credit you have from previous years. You can read more about the adoption credit by using this link:  https://www.irs.gov/taxtopics/tc607