We’re approaching the end of the fiscal year this December, so we think it’s a good time to talk about the adoption tax credit for Part 4 of our adoption article series.
This tax credit is subtracted from your tax liability and isn’t available for any reimbursed expenses.
Findlaw states the following:
“although it’s generally allowed for the year following the year in which the expenses are paid, a taxpayer who paid qualifying expenses in the current year for an adoption which became final in that same year may be eligible to claim the credit on the current year return.”
Some basics for the adoption tax credit are as follows:
- Expenses only qualify for specific reasonable and necessary fees, including adoption fees, court costs, attorney fees, traveling expenses, etc.
- In order to qualify, the child must be under 18 years old, or in a state where he or she can’t physically or mentally incapable of caring for himself or herself.
- In certain circumstances, your qualified adoption expense amount may be higher if the adopted child has special needs.
Qualifying adoption expenses: Credits & exclusions
- Under the dollar limit, the amount of the credit or exclusion is “limited to the dollar limit for that year for each effort to adopt an eligible child”. In the case that both a credit and exclusion can both be taken, the dollar amount applies separately for each.
- In a particular year, the dollar limit “must be reduced by the amount of qualifying expenses taken into account in previous years for the same adoption effort”.
- If married, a joint return must be filed in order to obtain the adoption credit or exclusion, unless your filing status is married filing separately (only if you meet special requirements).
Quick look at filing for the credit
- Form 8839 is known as the Qualified Adoption Expenses Form. This is required to take the adoption tax credit or exclusion.
- Once filled out, you have to attach the form to your Form 1040 (report the credit on line 53) or 1040A (report the credit on line 34).
We have given important steps towards obtaining an adoption tax credit or exclusion properly, but there’s more to the process. To save you time, stress, research, and paperwork, we suggest the hiring of an adoption law attorney.
Family law attorney Taylor Fontenot is experienced in adoption law and adoption cases. Taylor will be able to help you with answering any questions involving your adoption case. Have questions? Call 337-704-7255 or email the Southern Oaks Law Firm office today.