In order to offset some of the costs of adopting a child, the IRS offers an adoption tax credit. This applies to both domestic and foreign adoptions and covers many different types of expenses.
How Much Is the Adoption Tax Credit?
This tax credit allows adoptive parents to claim up to $13,570 per child for qualified adoption expenses. Qualified expenses may include:
- Adoption fees
- Legal fees and court costs
- Travel, food, and lodging expenses related to adoption efforts
If you have other expenses that are necessary to the adoption process, they may be eligible, as well.
When Can I Claim It?
In looking at when you can claim the adoption tax credit, the first thing to consider is timeline. In many cases, the adoption process can take multiple years. In order to account for that, the IRS allows you to claim the credit (up to $13,570 total) over five years.
The exact timing of when you can claim this credit depends on whether you’re pursuing a domestic or foreign adoption. For a domestic adoption, you can generally claim this tax credit in the year after the expense was incurred. This allowance applies even if an adoption is never finalized.
If you’re pursuing a foreign adoption, however, you must wait until the year the adoption is finalized before you can claim this credit. You can still apply it to expenses incurred in prior years, but you can’t actually claim it until the year the adoption is complete.
Where Can I Get More Help?
In order to fully understand the tax implications of adopting a child, reach out to your local tax experts for assistance. The team at Pro Tax Resolution is on-call to help clients in Virginia Beach with all your adoption-related tax questions. Call us today!