ADOPTION & IRS TAX CREDITS
Taxpayers who adopt a child may qualify for the adoption tax credit. This tax credit has increased for the years 2010 and 2011 to $13,170.
You may qualify for the adoption tax credit if you adopted a child and paid out-of-pocket expenses relating to the adoption. The amount of the tax credit you qualify for is directly related to how much money you spent on adoption related expenses. If you adopt a special needs child, however, you are entitled to claim the full amount of the adoption credit, even if your out-of-pocket expenses are less than the tax credit amount.
The adoption credit is calculated on Form 8839 Qualified Adoption Expenses. You may claim an adoption credit of up to $13,170 per eligible child.
Qualifying Expenses
Qualifying adoption expenses are reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses (including amounts spent for meals and lodging) while away from home, and other expenses directly related to, and whose principal purpose is for, the legal adoption of an eligible child. For domestic adoptions, you can claim the credit for adoption related expenses in the year the adoption is completed.
Income Limits
The income limit on the adoption tax credit is based on modified adjusted gross income (MAGI) and is gradually phased out depending on income.
| If your MAGI is: | Then the MAGI limit: |
| $182,520 or less | will not affect your credit |
| $182,520 to $222,520 | will reduce your credit |
| $222,520 or more | will eliminate your credit |
