Written by Scott Allen

Tax Preparation: Form 8839 – Qualified Adoption Expenses

Information to consider when claiming the Adoption Credit:

If you are considering adopting a child, you may qualify for the adoption tax credit, which is up to $14,890 per child.

In order to qualify, you must have adopted a child and paid out-of-pocket expenses relating to the adoption.  The amount of the tax credit is depended on the amount you spent on adoption-related expenses.  If you adopt a special needs child you are entitled to claim the full amount of the adoption credit even if you didn’t spend the full $14,890.

The adoption credit was scheduled to expire until health care legislation passed and extended it through tax year 2022.

For higher income earners, the phase out for the credit starts at $216,000.  To be eligible for the credit you must adopt a child 17 or younger.  Or a child of any age who is a US citizen or resident alien and who is physically or mentally unable to care for himself or herself.

Many argue the issues with the tax credit, is that you had to spend that money out of pocket before you can claim the credit.  If the credit is based off expenses you have already spent it is difficult for lower-income families to adopt.

Qualified adoption expenses include: adoption fees, attorney fees, court costs, travel expenses and re-adoption expenses related to the adoption of a foreign child.

Qualified adoption expenses that do not qualify include:

  • those for which you received funds under any state, local, or federal program
  • that violate state or federal law
  • for carrying out a surrogate parenting arrangement
  • for the adoption of your spouse’s child
  • paid or reimbursed by your employer or any other person or organization
  • or allowed as a credit or deduction under any other provision of federal income tax law.

For more information please contact Scott Allen, E.A. with Tax Debt Advisors, Inc  www.ScottAllenEA.com