Welcoming a child into a family is a deeply fulfilling experience, but it can also be a significant financial commitment. The federal government recognizes the financial strain that adoption can place on families and provides assistance in the form of an adoption tax credit. This credit can help alleviate some of the financial burdens associated with the adoption process and make adoption more accessible to a wider range of families.

The Adoption Tax Credit is designed to assist families with the expenses incurred during the adoption process, including adoption fees, legal fees, court costs, travel expenses, and other eligible expenses.

The Adoption Tax Credit:

• Makes adoption accessible. By making adoption more affordable, the tax credit makes it possible for more families to consider adoption as a viable option for growing their families. There is an income limit to claim the full adoption tax credit, with the credit gradually phasing out for higher-income taxpayers.
• Encourages adoption. The availability of the adoption tax credit encourages prospective parents to consider adoption, thereby potentially reducing the number of children in need of permanent homes.
• Supports special needs children. The tax credit provides additional support for families adopting children with special needs, making it easier for these children to find loving homes.

To claim the adoption tax credit, adoptive parents must complete and submit the proper IRS form with their tax return, the year after their adoption is finalized. The credit is non-refundable, meaning it can reduce the adoptive parents’ tax liability but cannot result in a refund if the credit exceeds their tax liability for the year.

The adoption tax credit is an invaluable resource for adoptive families, providing much-needed financial support. By making adoption more affordable and accessible, the tax credit helps fulfill the dreams of countless families longing to welcome a child into their lives. It’s essential to understand the eligibility criteria and claim procedures to maximize the benefits of this credit fully. We recommend adoptive parents work with an experienced tax professional when applying for the Adoption Tax Credit. The Adoption Tax Credit is a vital tool for adoptive parents and helps more children find loving and nurturing families.