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Understanding the Federal Adoption Tax Credit

If you have considered adoption, you are probably well aware that the process can be rather expensive. According to the Child Welfare Information Gateway, a U.S. government-funded adoption information service, the average U.S. adoption costs between $8,000 and $40,000. Fortunately, there are several ways to help fund your adoption, including the Federal Adoption Credit, which has made adoption a more viable option for many parents who otherwise may not have been able to afford it.


Make sure you understand the Federal Adoption Tax Credit.

What is the Federal Adoption Tax Credit?

A 2006 study by the Children’s Bureau found that “approximately $65,422 to $126,825 is saved for every child who is adopted rather than placed in long-term foster care.” So the federal government set help out to not only itself, but also those families looking to adopt.

Established in 1997, the Federal Adoption Tax Credit provides adoptive families with at least some relief from the sometimes substantial costs of adoption. The tax credit is non-refundable for all qualifying adoption expenses, meaning that only those individuals with tax liability (taxes owed) will benefit. The credit applies to all types of adoption, except stepparent adoption.

In January 2013, the Federal Adoption Tax Credit was made permanent by the American Taxpayer Relief Act of 2012 (H.R.8) and in 2015 the maximum amount available is $13,400. This figure continues to grow each year along with the cost of living. In 2014, for example, the tax credit was $13,190. In 2013 it was $12,970.

If there is any remaining credit not used in the year you file for the Federal Adoption Tax Credit, it can be carried forward for up to five years.  For example, if you claim $3,000 in adoption expenses in 2015, you would be able to claim roughly $10,400 in 2016, depending on the 2016 maximum amount available.

The amount of the tax credit you qualify for is directly related your adoption-related expenses – except for families who adopted children with special needs. Since 2003, these adoptive families have been able to claim the maximum credit regardless of their qualified adoption expenses.

Examples of qualified expenses include:

·         Adoption fees·         Court costs

·         Attorney fees

·         Travel expenses·         Re-adoption expenses to adopt a child internationally

Want More Help? Remember, You Are Not Alone!

Adoption Makes Family is here to help! We are a non-profit (501-C3) licensed adoption agency based in Maryland. Our adoption counselors are available 24 hours a day, 7 days a week for your convenience. If you would like our advice or just need to talk, please give us a call at any time.

24-Hour Hotline 410-683-2100

If you have any questions about how to create your adoption plan, you can contact us by e-mail – or use our online contact form. Adoption Makes Family was founded to meet the needs of birth parents and adoptive parents in a manner that is sensitive, compassionate, and personal.

This entry was posted on Tuesday, November 3rd, 2015 at 6:47 pm . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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