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How To Claim Tax Benefits for Adoption

By IntFormalities
Updated on February 1, 2023
Estimated reading time: 5 minutes

Adopting a child is an expensive process. It doesn’t matter if you adopted a child in the US or abroad. You’ll soon find that you need to spend a lot more than you imagined. Thankfully, the federal government has introduced the Adoption Tax Credit to reward American taxpayers for adopting a child. This article looks into the tax credit, its scope, eligibility, and how to file a claim. 

How to Claim Tax Benefits for Adoption
The Adoption Tax Credit is a government-backed benefit provided to American taxpayers for adopting a child within and outside the US.

What is Adoption Tax Credit?

The Adoption Tax Credit (ATC) is a benefit provided to American taxpayers to significantly offset the costs, charges, and fees of an adoption process. It is offered to Americans who have an adopted child – regardless of whether they were adopted across the border or through private foster care.

The ATC is managed by the Internal Revenue Service and it works as a refundable credit. This means that families who do not owe taxes can benefit from it as a tax refund.

The overall idea behind this tax credit is to make the adoption process more affordable for families and to smoothen the process of children moving from foster care to permanent homes.

Benefits of the Foster Care Adoption Tax Credit

Some of the advantages of claiming the adoption tax credit include:

  • Adoption affordability. The ATC makes adoption affordable for American taxpayers who are planning to adopt but are skeptical about the costs.
  • Refundable. The adoption tax credit 2023 is refundable, meaning households who do not owe taxes can get this benefit as a tax refund. 
  • Reduced state financial burden. The benefit also acts as an offset to reduce the financial burden of the federal and state governments.
  • Attention to children with special needs. The tax benefit can also be utilized for children with special needs – as they typically need expensive care compared to others. 

What Can the Credit Be Used For?

The adoption tax credit can be used to cater to adoption expenses. This encompasses court costs, attorney fees, travel expenses, accommodation costs, and other charges related to the legal adoption of a child. 

You cannot use the ATC for the following:

  • Expenses for adopting your partner’s child 
  • Payments that violate federal and state law 
  • Payments that are reimbursed by your employer 
  • Charges you paid using funds you received from a local, state, or federal program 

How Much is the ATC?

The amount of the tax credit you qualify for is related to the expenses and costs paid toward adopting the child. You can receive an ATC of up to $14,440 per child adopted. While the credit is available to most adoptive parents, there are some limitations that we will address below. The amount of credit you receive depends on the expenses incurred during the adoption process.

Adoption Tax Credit Income Limit

Adoptive parents with annual income limits below $223,410 can claim the credit. However, this credit is completely phased out for taxpayers with modified adjusted gross income (MAGI) above $263,410. 

How to Qualify for ATC

You must meet the following requirements to be eligible for the ATC: 

  • The adoption process must be complete
  • The child must be under 18
  • The child must be physically or mentally incapable of taking care of themselves 
  • Your income must be below certain income limits stipulated by the IRS
  • You must be the child’s adoptive parent and must have paid all the expenses related to the adoption

How to Apply

There are three ways to claim your adoption tax credit: online, on the phone, or by mail. To do it online, you should file Form 8839 (Qualified Adoption Expenses) or visit Tax Topic 607 – Adoption Credit and Adoption Assistance Programs on the official IRS website. You can also call 800-829-1040 or write to the following address: 

IRS Tax Forms & Publications


1111 Constitution Ave NW

Washington, DC 20224

Documentation Needed

You will need the following documentation when filing a claim for the ATC:

  • Adoption travel expenses 
  • Receipts of charges and fees incurred 
  • Agency and legal fees 

When Can You Claim the Credit?

If you adopt a child in the US, you may claim the credit the year after you incurred the adoption charges. However, if you facilitated the adoption the same year you incurred the expenses, you can claim the credit for the year. 

For international adoptions, you can only claim the credit the year after the adoption process is completed.

Processing Time for Claiming the ATC

The processing time for claiming the tax credit can take up to several weeks. This may be due to the workload of the IRS and individual circumstances. It is essential to file a claim for the credit as soon as possible. 

How Many Years Can You Claim The Adoption Tax Credit?

You can claim the ATC for the year the adoption was finalized. However, if the credit exceeds your tax liability, the unused credit can be carried for up to five years.

Maximize Your Adoption Tax Credit Today

The Adoption Tax Credit is a government-backed benefit provided to American taxpayers for adopting a child within and outside the US. This benefit aims to encourage the adoption process and take kids from foster care into permanent homes. 

The tax credit offsets the financial expenses, charges, and fees incurred from the adoption process – with you claiming up to $14,400 per adopted child. Did you recently adopt a child? Take advantage of this benefit today.

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