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Adoption and the federal tax credit

On Behalf of | Dec 7, 2022 | Adoption |

Families looking to adopt a child in Texas face many considerations. The ability to provide solid financial support to the adopted child often looms large.

Several resources exist to help families on this journey, including a valuable tax credit from the federal government.

Details of the Adoption Tax Credit

According to information from the IRS, families can use the Adoption Tax Credit for these types of adoptions: international, domestic private and foster care.  The value of the credit changes each year and had a potential credit of $14,400 per eligible child in 2021. The value increased to $14,890 per child in 2022.

Taxpayers who wish to adopt must qualify for the credit. Income limits and other factors could apply. For example, taxpayers who adopt their spouse’s child do not qualify for the credit. IRS Form 8839 can help families better understand the amount of credit they might receive. Eligible children must fall below 18 years of age or they must need help with care.

Information on qualifying expenses

Taxpayers who meet the requirements of the credit can only claim certain expenses. These cover a range of costs, including the following:

  • Reasonable and necessary adoption fees
  • Related legal fees and court costs
  • Travel expenses necessary for the adoption process
  • Miscellaneous costs related to the adoption

Some expenses can predate the identification of an adopted child. These expenses could include classes on adoption education or other study programs related to the goal of adopting a child.

While adoption remains a personal choice, families can face significant financial challenges. A look at aid options, including tax credits, could reduce the overall expense for families.