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4 ways the Adoption Tax Credit can help families

Posted on September 22, 2023

The Adoption tax credit helps families who were engaged in the adoption process during 2023 claim up to $14,890 in eligible adoption expenses per eligible child. Adopters may apply the credit to

  • International
  • Domestic
  • Private, or
  • Public foster care adoptions.

Expenses may be deductible even if the taxpayer pays them before an eligible child is identified. (For instance, some future adoptive parents pay for a home study at the beginning of the adoption process. These parents can claim the fees as qualified adoption expenses.)

To claim the adoption credit, taxpayers must complete Form 8839, Qualified Adoption Expenses and attach it to their tax return. This is the form to use to figure how much credit they can claim.

Here’s what to know:

  • There are income limits that affect the amount of the credit taxpayers can claim.
  • The adoption tax credit is non-refundable. It will reduce a tax bill but will not result in a refund, even when the amount of credit is greater than the tax bill.
  • Importantly, taxpayers may carry any remaining credit forward and apply it to future tax returns for up to five years.

What does the IRS consider an eligible child?
An eligible child is an individual who is under the age of 18 or is physically or mentally incapable of caring for themself.

Qualified adoption expenses include:

  • Adoption fees
  • Court costs and legal fees
  • Adoption-related travel expenses including meals and lodging
  • Other expenses directly related to the legal adoption of an eligible child

Qualified adoption expenses do not include expenses that a taxpayer pays to adopt their spouse’s child. They may, however, include adoption expenses paid by a registered domestic partner if that partner lives in a state that allows a same-sex second parent or co-parent to adopt their partner’s child.

Still have questions particular to your specific situation? Teipen Group CPAs can help you find answers to your questions, or go to IRS.gov at:
Form 8839, Qualified Adoption Expenses
Topic No. 607 Adoption Credit and Adoption Assistance Programs