Adoption Tax Benefits
Qualified Adoption Expenses
For both the credit and the exclusion, qualified adoption expenses, defined in section 23(d)(1) of the Code, include:
Any expense may be a qualified adoption expense even if the expense is paid before an eligible child has been identified. For example, prospective adoptive parents who pay for a home study at the outset of an adoption effort may treat the fees as qualified adoption expenses.
Any expense may be a qualified adoption expense even if the expense is paid before an eligible child has been identified. For example, prospective adoptive parents who pay for a home study at the outset of an adoption effort may treat the fees as qualified adoption expenses.
The tax year for which you can claim the credit depends on the following:
The adoption tax credit income limit is based on modified adjusted gross income (MAGI) and is recalculated each year based on current cost of living. For the 2018 Adoption Tax Credit, the maximum amount available will begin to phase out for families with MAGI above $207,580 and will be unavailable to families with incomes around $247,580 or above.
Adoptive parents who work for companies with an adoption assistance program also receive a tax break. Adoptive parents can receive up to $13,400 in reimbursement from their employer for adoption expenses. Please make sure you are keeping accurate record on the reimbursement. You cannot take a tax credit for expenses reimbursed by employers.