Adoption Tax Credit: 3 Steps to Lighten the Load

Many adoptive parents rely on the federal adoption tax credit to help relieve some of the costs of adopting. This is a great incentive for those looking to adopt. If you adopt a child and paid out-of-pocket adoption expenses, you can claim up to $12,150 per child for the 2009 tax year.

Step 1: Make Sure you Qualify

You're only eligible for an adoption tax credit if you:
  • have an annual adjusted gross income of less than $152,000 (there are partial adoption tax credits available for those with an adjusted gross income between $152,000 and $195,000);
  • adopt an eligible child, which includes children 17-years-old and younger or a U.S. citizen or resident alien of any age who is mentally or physically handicapped;
  • pay adoption expenses out-of-pocket (including adoption fees, attorney fees, court costs, travel expenses, and other "necessary" expenses).
Expenses that are not covered by the adoption tax credit include:
  • expenses for surrogate parent arrangements;
  • expenses for stepparent adoptions;
  • expenses reimbursed by your employer;
  • expenses that you could deduct from any other federal income tax rule;
  • expenses that violate federal or state law.
2. Fill out the Necessary Forms

To receive a federal adoption tax credit, you must fill out Form 8839 - Qualified Adoption Expenses, and include it with your return. Be sure to fill out the applicable sections for adoption tax credit in your 1040 or 1040A.

Generally, if you are married, you must file a joint return to get an adoption tax credit. If you are married but filing separately, special requirements may apply.

In order to file the needed paperwork, your child must have a Social Security Number. If he or she does not yet have a Social Security Number, you must apply for an Adoption Tax ID Number. You can find more information about this and other forms by contacting the IRS or visiting their website.

3. Claim Your Credit

To claim your adoption tax credit, first be sure to save all receipts associated with adoption expenses. Generally you cannot claim your expenses until a full year after the adoption is finalized. When to claim depends on the date of finalization and whether or not your adopted child is a U.S. citizen.
  • If the child is a U.S. citizen or resident alien, you may take your adoption credit in the year the expenses were paid.
  • If the child is a foreign national, you may only claim expenses in the year when the adoption becomes final.