Adoption Tax Credit
ADOPTION TAX CREDIT:
Adoptive parents may qualify for an adoption tax credit. The amount of the adoption credit for the year 2012 is $12,650 per eligible child. The tax credit can be used to reduce the amount you owe in federal income taxes for 2012 with a carry over for five years.
How to qualify
There are two ways to qualify for the adoption tax credit:
Out of pocket expenses:
You may claim an adoption credit for the amount of out of pocket expenses related to the qualified adoption expenses directly related to the adoption including adoption fees, attorney fees, court costs and travel expenses. You may not claim expenses reimbursed by your employer or any other person or organization.
- Special needs child:Adoptive parents of a special needs child may claim the full adoption credit in the year the adoption is finalized. Out of pocket expenses are not considered.
When credit is not available?:
The credit is not available when the child is adopted in the following areas:
- Step parent adoption;
Documents necessary to claim tax credit:
The IRS may request the final adoption decree, placement agreement from an authorized agency, court documents and the state's determination that the child has special needs.
Adoption credit resources: For more detailed information go to: http://www.publiccounsel.org/publications?id=0177