Adoption tax credit calculator

The Adoption Tax Credit Calculator for 2024 helps prospective adoptive parents estimate their potential tax savings by considering qualified adoption expenses, such as adoption fees, court costs, attorney fees, and travel expenses. The calculator accounts for the maximum credit limit, which is $15,000 per child in 2024, and the income phaseout range starting at $252,150 and ending at $292,150.

By inputting their modified adjusted gross income (MAGI) and qualified expenses, users can determine the credit amount they are eligible for, factoring in any applicable phaseout reductions, thus aiding in financial planning for the adoption process.

2024 Adoption Tax Credit Calculator

Calculation of Adoption Tax Credit

In order to compute Adoption Tax Credit you need to compute the qualified adoption expense and the phase out percentage . Le me start with how to compute the Qualified Adoption Expenses which include:

  1. Adoption fees
  2. Court costs
  3. Attorney fees
  4. Travel expenses (including meals and lodging)
  5. Re-adoption expenses for a foreign child

Your gross qualified adoption expense is aggregate of expense (1 to 5 above .)

The IRS sets a maximum adoption credit amount each year. For 2024, let’s assume it is $15,000 per child. But the adoption tax credit begins to phase out if your modified adjusted gross income (MAGI) exceeds a certain amount. For 2024, let’s assume the phaseout starts at $220,000 and completely phases out at $260,000.

Formula and Computation:

  1. Your tax credit is minimum of Gross Qualified adoption expense and maximum tax credit available for the year 2024 which is $15,000 per child.
  2. However ,if your Modified Adjusted Gross Income is more than the phaseout end income , you get zero tax credit . If the MAGI is between Phaseout begins and Phaseout Ends range , then phaseout percentage needs to be computed . That should be multiplied with the maximum adoption credit available . The phaseout begins and phaseout ends income for 2024 are :
    (i) Phaseout begins : $252,150;
    (ii) Phase out ends :$292,150

Example Calculation for Adoption Tax Credit

Here is an example of calculation of adoption tax credit for adoption of one child , for which gross qualified expense was $18,000. Let us say the parent had MAGI of $270,000.

  • Qualified adoption expenses: $18,000
  • Maximum credit for 2024: $15,000
  • MAGI: $230,000
  • Phaseout start: $252,150
  • Phaseout end: $292,150
  • Phaseout range: $40,000
  1. Calculate Qualified Expenses and Compare with Maximum Credit: [
    Credit before phaseout = min(18,000, 15,000)= 15,000
    ]
  2. Phaseout Calculation: [
    Excess Income = 270,000 – 252,150 = 17,850
    Phaseout Percentage} = 17,850 x 100/40,000 = 44.63
    Reduced Credit = 15,000 x (1 – 44.46%) = $8306.25

So, the adoption tax credit for tax year 2024 , you can claim in this scenario is $8306.25.

Prashant Thakur

Prashant Thakur

Prashant Thakur is a practicing tax advisor on Income Tax Act of India . He also blogs on US taxation law (IRC) . He has more than 30 years of experience in dealing with tax issues ( 20 years on the other side of the table i.e for Income Tax department) . He has written three books - Tax Evasion Through Shares( 2008 & 2012) , Taxing Question Simple Answer (2013) and Crypto Taxation in USA (2022) . Other than taxation , he has great interest in cloud technology, WordPress and is found of small tech company .
Prashant Thakur
Prashant Thakur
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