I adopted my daughter last year. It was a kinship adoption which means the state paid for everything. I am having trouble identifying if this is the qualification for a special needs adoption. Ive read the following from the North American Council on Adoptable Children web site. The below says to me that because the state took care of expenses, it would then be considered a special needs adoption. Can someone confirm or reject this with some backup info? Note special needs does not imply physical or mental handicap. the descriptor is based on the means by which the adoption took place.
Qualifying as Special Needs
Families who finalized the adoption of a child who has been determined to have special needs in 2022 can claim the full credit of $14,890 regardless of their adoption expenses. The credit for all other adopted children is based on the family’s qualified adoption expenses.
Basically, a child with special needs is a child in U.S. foster care who receives adoption subsidy or adoption assistance program benefits (which can include a monthly payment, Medicaid, or reimbursement of nonrecurring expenses). The instructions for the 2021 tax credit explain that to be considered a child with special needs, the child must meet all three of the following characteristics:
- “The child was a citizen or resident of the United States or its possessions at the time the adoption effort began (US child).
- A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents’ home.
- The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. Factors used by states to make this determination include:
- The child’s ethnic background and age,
- Whether the child is a member of a minority or sibling group, and
- Whether the child has a medical condition or a physical, mental, or emotional handicap.”
Just because a child is disabled does not mean the child is considered special needs. No child adopted internationally is considered special needs for the adoption tax credit. Not even every child adopted from foster care is considered special needs (about 10 percent of children adopted from care do not receive adoption assistance support). Those who do not receive any support from the adoption assistance program are likely not to have been determined to have special needs.
Bottom line, if your child does not receive adoption subsidy/adoption assistance benefits, you will need to have qualified expenses to claim the credit.
