Who is eligible?
- Families with a modified adjusted gross income of less than $243,000. (There is a phasing out of the credit beginning at $203,000.)
What adoptions are eligible?
- The adoptive child must be under the age of 18.
- If the child is physically or mentally incapable of caring for himself/herself, no age limit applies.
- NOTE: Expenses related to the adoption of stepchildren are considered non-qualified expenses.
How much is the tax credit?
- The maximum credit for 2017 is $13,570 per child.
What expenses are eligible?
Examples of eligible adoption expenses, as defined in section 23(d)(1) of the Code, include:
- Reasonable and necessary adoption fees,
- Court costs and attorney fees,
- Traveling expenses (including amounts spent for meals and lodging while away from home), and
- Other expenses that are directly related to and for the principal purpose of the legal adoption of an eligible child.
What expenses are not eligible?
- Expenses associate with establishing legal guardianship;
- Allowed as a credit or deduction under any other federal income tax rules;
- Reimbursable under a federal, state or local program or from another employer or party;
- In violation of federal or state law;
- Associated with a surrogate parenting arrangement;
For additional information about exclusions and income limits, please refer to IRS guidelines, available online at http://www.irs.gov/taxtopics/tc607.html. Please contact a personal tax advisor with any questions.
To read the full article “Tax Benefits for Adoption: The Adoption Tax Credit,” written by Executive Director of Lifeline, Herbie Newell, click here.