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How do I claim the Adoption Credit in 2023?

by Intuit Updated 4 months ago

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 (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.

Usually, the credit is permitted whether the adoption is domestic or foreign. However, the timing rules for claiming the credit for qualified adoption expenses are different, depending on the kind of adoption.

  • 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 possessions before the adoption begins). Qualified adoption expenses paid before the year the adoption becomes final are permitted as a credit for the tax year following the year of payment (even if the adoption isn't finalized and even if an eligible child was never identified).
  • foreign adoption is the adoption of an eligible child who isn't yet a citizen or resident of the U.S. or its possessions before the adoption effort begins. Qualified adoption expenses paid before and during the year are permitted as a credit for the year when it becomes final.
  • You have a carryforward of an adoption credit from 2022
  • 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 income (MAGI) is over $223,410 (and is phased out at $263,410) for 2023

Expenses which qualify for the adoption 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
  1. Open or continue your return if it isn't already open.
  2. Search for adoption credit and select the Jump to link.
  3. 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.
  4. Continue answering questions until the section is completed.

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.
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