Understanding the adoption tax credit

Taxpayers who adopted or started the adoption process in 2021 may qualify for the adoption credit. This credit can be applied to international, domestic private, and public foster care adoption. Taxpayers who adopt their spouse's child can't claim this credit.

Here is some basic information to help people understand this credit and if they can claim it when filing their taxes:

• The maximum adoption credit taxpayers can claim on their 2021 tax return is $14,440 per eligible child.
• There are income limits that could affect the amount of the credit
• Taxpayers should complete Form 8839, Qualified Adoption Expenses. They use this form to figure how much credit they can claim on their tax return.
• An eligible child must be younger than 18. If the adopted person is older, they must be unable to physically take care of themselves.
• This credit is non-refundable. This means the amount of the credit is limited to the taxpayer's taxes due for 2021. Any credit leftover from their owed 2021 taxes can be carried forward for up to five years.
• Qualified expenses include:
  • Reasonable and necessary adoption fees.
  • Court costs and legal fees.
  • Adoption related travel expenses like meals and lodging.
  • Other expenses directly related to the legal adoption of an eligible child.

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