How do I claim the Adoption Credit?
The adoption tax credit provides an incentive for individuals or families to adopt a child. A credit for adoption expenses up to $13,460 in 2016 is available for persons adopting a:
- Domestic (US) child under the age of 18; or
- Domestic special needs child (certified by a state agency); or
- Foreign child whose adoption became final in the current tax year.
Regarding the adoption tax credit, keep in mind:
- If you've adopted the child of your spouse, you cannot claim this credit.
- The credit is not usually available if you are Married Filing Separately.
To claim the adoption credit in TurboTax:
- Open your return in TurboTax.
- Search for adoption credit and then click the "Jump to" link in the search results.
- Read the info on the Credit for Adoption Expenses screen, and if the situation applies to you, answer Yes.
- Follow the onscreen instructions.
Keep your adoption documents with your tax records.
If you finalized an adoption in 2016, you may qualify for the credit. The credit is a one time amount for each adopted child. If you began an adoption in a prior tax year which is not yet final, and had expenses in that year, you may be able to apply those expenses this year against the credit for that child. This reduces the amount of the credit available in later years for that adopted child.
The adoption of a foreign child must be final before you can claim the credit. You can still claim expenses paid in a prior year when the adoption becomes final.
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 (MAGI) income is over $201,920 (and is phased out at $241,920) for 2016.
Adopting a domestic special needs child may qualify to receive the entire credit amount, even if your qualifying expenses were less than the amount of the credit.
Expenses which qualify for the 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
Expenses for domestic adoptions in a year prior to the adoption becoming final may qualify for a portion of the credit for that child. Keep receipts for all qualified adoption expenses with your records.