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The Adoption Tax Credit

The IRS recognizes that the adoption process can be expensive. Thus, the adoption tax credit exists. This tax credit can offset some of those expenses. Taxpayers who adopted or started the process in 2020 may be eligible to claim this credit.

According to the IRS, the maximum adoption credit amount that taxpayers can claim on their 2020 tax return is $14,300 per eligible child. The income limit of the taxpayer’s modified adjusted gross income can affect the credit amount. An eligible child must be younger than 18, or he or she must be physically or mentally unable to take care of themself.

The adoption credit is non-refundable. Taxpayers can complete Form 8839 to claim the credit for qualified adoption expenses. These expenses include reasonable and necessary adoption fees, court costs and legal fees, adoption related travel expenses, and other expenses directly relating to the legal adoption of an eligible child. Qualified adoption expenses do not include costs paid by a taxpayer to adopt their spouse’s child.

Want help with your 2020 taxes? Please contact Lakeesha Browne, CPA.

“People Who Adopt May Benefit from This Special Tax Credit.” IRS, 25 Mar. 2021, https://www.irs.gov/newsroom/people-who-adopt-may-benefit-from-this-special-tax-credit

Accessed 25 Mar. 2021.