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Adoption Expenses

Have you expanded your family?

If you are thinking about, or have already adopted a child under the age of 18, there are deductions and credits available for the expenses you have incurred. A recent change to the law has increased the amount of credit that is available. In 2009, you may be entitled to a tax credit of up to $12,150.

Expenses that qualify for this credit include any reasonable and necessary adoption fees, court costs, attorney fees, travel expenses (including meals and lodging), and any other expenses you paid that were required by the state as a condition of the adoption.

Generally, the credit is allowed in the year the adoption becomes final. If you paid adoption expenses in 2008, and the adoption is not final until 2009, the credit will be allowed on your 2009 income tax return. If you adopt a special needs child from the U.S., you are eligible for the full $12,150 credit regardless of your actual expenses.

The credit will reduce your tax liability dollar for dollar. If you are unable to use the entire amount, the remainder can be carried over to claim for the next five years. Any carryover existing after the five-year period is lost.

Related IRS Publications: Form 8839