You can
claim qualified adoption expenses on
your tax return.
Qualified
expenses include adoption
fees, attorney fees, court costs and
travel expenses, (including meals and
lodging while away from home) along with
other expenses directly related to the
legal adoption of an eligible child.
Expenses
that don't qualify
expenses that violate state or federal
law, expenses associated with the adoption of
your spouse's child,
expenses paid with funds received from
any government program,
expenses associated with surrogate
parenting arrangements,
expenses paid or reimbursed by an
employer or someone else, expenses
allowed as a credit or deduction under other federal income
tax provisions.
You can claim the
Adoption Credit and Exclude up to $11,390
for qualifying adoption expenses. This
means you may be able to claim
a credit of up to $11,390 and also
exclude up to $11,390 from your income
as long as you don't claim both a
exclusion
and credit on the the same expense.
The credit and exclusion are reduced if
your modified adjusted gross income is
between $170,820 and $210,820. You may
Not
claim either one
if your modified adjusted gross income
is $210,820 or more.
If you're adopting a special needs
child, you can claim the full credit
regardless of the amount spent on
adoption expenses.
Check with
your employer about assistance since some
companies offer programs to reimburse a
portion of adoption expenses. The
Adoption Credit is not available for any
reimbursed expense, but certain amounts
reimbursed by your employer for
qualifying adoption expenses may be
excluded from your gross income. You
will need to claim the credit the year after you pay
expenses or the year the adoption is
finalized, whichever came first.
Is your child eligible?
-
The
adopted child must be a U.S. citizen
or resident at the time the
adoption, a finalized adoption of a
foreign or non-resident child.
-
You must
adopt an eligible child younger than
18, or the child must have special
needs, be physically or mentally
incapable of self care.
-
A state has determined that the child
can't or shouldn't be returned to their
parents' home and probably won't be
adopted unless assistance is provided.
States make this determination based
on a variety of factors some of
which include:
ethnic background
the child's age
the child's minority status
whether the child has siblings
if the child has a chronic medical
condition
if the child has an emotional or
physical handicap
In the case of
a U.S. child, you can claim the credit
even if your adoption of the child
fails. However, if your adoption
involves a foreign child, you can take
the credit only if the adoption is
finalized.
You may claim the
credit in more than 1
year. For example, assuming you spent $400
in 2006 for a home study to adopt a U.S.
child, then an additional $2,000 in
court costs and adoption agency fees in
2006. If the adoption wasn't finalized
until 2007, you would claim a $500
credit in 2006 and a $2,000 Adoption
Credit in 2007. If the adoption became
final in 2006, you would have taken the
entire $2,400 credit in 2006. But
remember, for foreign children, no
credit may be taken unless the adoption
is completed.
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