{"id":3955,"date":"2020-10-19T12:52:47","date_gmt":"2020-10-19T12:52:47","guid":{"rendered":"https:\/\/www.irstaxapp.com\/?p=3955"},"modified":"2020-10-19T13:27:15","modified_gmt":"2020-10-19T13:27:15","slug":"how-does-adoption-tax-credit-work","status":"publish","type":"post","link":"https:\/\/www.irstaxapp.com\/how-does-adoption-tax-credit-work\/","title":{"rendered":"How does adoption tax credit work?"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><picture><source srcset=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-1024x576.webp 1024w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-600x338.webp 600w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-300x169.webp 300w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-768x432.webp 768w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-1536x864.webp 1536w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-150x84.webp 150w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit.webp 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" type=\"image\/webp\"><img src=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-1024x576.png\" height=\"576\" width=\"1024\" srcset=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-1024x576.png 1024w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-600x338.png 600w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-300x169.png 300w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-768x432.png 768w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-1536x864.png 1536w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit-150x84.png 150w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2020\/10\/adoption-tax-credit.png 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" class=\"wp-image-3956 sp-no-webp\" alt=\"\" decoding=\"async\" loading=\"lazy\"  > <\/picture><\/figure>\n\n\n\n<p>Before one jumps to find the answer of this question, one should know &#8221; <strong><em>What is adoption tax credit<\/em><\/strong> ?&#8221;. So let me begin with that. As per the Internal Revenue Code, anyone adopting a child whether via public foster care, domestic private adoption, or international adoption, shall get a tax credit for<strong><em> qualified adoption expenses<\/em><\/strong> on such adoption. This is known as the Adoption Tax Credit. For the <a href=\"https:\/\/www.irstaxapp.com\/2020-mileage-reimbursement-calculator\/\">tax year 2020<\/a>, the maximum amount of tax credit per child is $14,300. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_62 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662d98cfbd4fc\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-662d98cfbd4fc\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.irstaxapp.com\/how-does-adoption-tax-credit-work\/#Who_qualifies_for_adoption_tax_credit\" title=\"Who qualifies for adoption tax credit ?\">Who qualifies for adoption tax credit ?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.irstaxapp.com\/how-does-adoption-tax-credit-work\/#What_about_adoption_of_%E2%80%9Cspecial_needs%E2%80%9D_child\" title=\"What  about adoption of &#8220;special needs&#8221; child?\">What  about adoption of &#8220;special needs&#8221; child?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.irstaxapp.com\/how-does-adoption-tax-credit-work\/#Is_child_adoption_expense_allowed_deduction\" title=\"Is child adoption expense allowed deduction ?\">Is child adoption expense allowed deduction ?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.irstaxapp.com\/how-does-adoption-tax-credit-work\/#What_if_my_employer_reimburses_adoption_expense\" title=\"What if my employer reimburses adoption expense?\">What if my employer reimburses adoption expense?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.irstaxapp.com\/how-does-adoption-tax-credit-work\/#Will_the_adoption_tax_credit_ever_be_refundable_again\" title=\"Will the adoption tax credit ever be refundable again?\">Will the adoption tax credit ever be refundable again?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.irstaxapp.com\/how-does-adoption-tax-credit-work\/#How_to_claim_adoption_tax_credit\" title=\"How to claim adoption tax credit ?\">How to claim adoption tax credit ?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_qualifies_for_adoption_tax_credit\"><\/span>Who qualifies for adoption tax credit ?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Most parents who desire to adopt will qualify for this <a href=\"https:\/\/www.irstaxapp.com\/home-energy-efficient-tax-credit\/\">tax credit<\/a> except in the following two situations<\/p>\n\n\n\n<ol><li>If, the modified adjusted income of the adoptive parent is $ 254520 in 2020. The tax credit begins to phase out at $214,520 of MAGI and phases out entirely at an income of $254,520.<\/li><li>The adoption tax credit is also not available for adoptions of stepchildren.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_about_adoption_of_%E2%80%9Cspecial_needs%E2%80%9D_child\"><\/span>What  about adoption of &#8220;special needs&#8221; child?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When state\u2019s welfare agency determines that the child cannot  be returned to his or her parents\u2019 home and that the child probably will not be adoptable without assistance provided to the adoptive family, such a child is considered  &#8220;special needs &#8221; child.The child must meet all three of the following characteristics:<\/p>\n\n\n\n<ol><li>\u201cThe child was a citizen or resident of the United States or its possessions at the time the adoption effort began (US child).<\/li><li>A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents\u2019 home.<\/li><li>The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. Factors used by states to make this determination include:<ul><li>The child\u2019s ethnic background and age,<\/li><li>Whether the child is a member of a minority or sibling group, and<\/li><li>Whether the child has a medical condition or a physical, mental, or emotional handicap.\u201d<\/li><\/ul><\/li><\/ol>\n\n\n\n<p>Therefore, law provides that a person adopting such a child will be eligible to claim maximum tax credit without actual out-of-pocket expenses.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_child_adoption_expense_allowed_deduction\"><\/span>Is child adoption expense allowed deduction ?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Yes , apart from the credit, the IRC provides that adopting person can deduct the adoption expense from his income. Types of expenses that can be Qualified adoption expenses include:<\/p>\n\n\n\n<ol><li>Adoption agency  fees for facilitating the child adoption process<\/li><li>Attorney fees <\/li><li>All court costs you incur<\/li><li>Any re-adoption expenses that relate to the adoption of a foreign child.<\/li><li>The travel expenses you incur in relation to the adoption of the child, including the cost of food and hotels when traveling away from home. <\/li><\/ol>\n\n\n\n<p>However certain expense may not be allowed like <\/p>\n\n\n\n<ol><li>Any amount that  employer reimburses on tour,<\/li><li>Fees you pay to a surrogate mother, or <\/li><li>Any expenses that relate to the adoption of your spouse\u2019s child.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_if_my_employer_reimburses_adoption_expense\"><\/span>What if my employer reimburses adoption expense?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Even in that case , you will be able to  deduct  the qualified adoption expenses paid or reimbursed by an employer, up to the same limit as the tax credit from your income . <\/p>\n\n\n\n<p class=\"has-background\" style=\"background-color:#fce7ed\"><strong>However, one should note that you can not claim both the exclusion as well as credit for  the same expenses for both.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Will_the_adoption_tax_credit_ever_be_refundable_again\"><\/span>Will the adoption tax credit ever be refundable again?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The answer is NO. Basically, the adoption tax credit which remains after setting off with your tax liability is non-refundable. However, the balance of the tax credit can be carried forward for up to five years. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_claim_adoption_tax_credit\"><\/span>How to claim adoption tax credit ?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The taxpayer must fill the  <strong>IRS Form 8839<\/strong>  and submit it with their Form 1040 when they file their 2020 taxes. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Before one jumps to find the answer of this question, one should know &#8221; What is adoption tax credit ?&#8221;. So let me begin with that. As per the Internal Revenue Code, anyone adopting a child whether via public foster care, domestic private adoption, or international adoption, shall get a tax credit for qualified adoption [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3956,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[31],"tags":[1414,1413,1412],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/3955"}],"collection":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/comments?post=3955"}],"version-history":[{"count":0,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/3955\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/media\/3956"}],"wp:attachment":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/media?parent=3955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/categories?post=3955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/tags?post=3955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}