Adoptive Families Blog

"Can we claim the Adoption Tax Credit if we're still waiting to adopt?"

Posted by Lifetime Adoption on March 9, 2018

"couple-doing-taxes.jpgI heard that we can claim the Adoption Tax Credit even if we haven't adopted yet. Is that true? We paid the expenses in 2016 and are pursuing domestic adoption. How do we claim adoption expenses when we're still waiting to be chosen by a birth mother?  We don't have a SSN or ATIN for a child."

Yes, this is true! Unlike with international adoptions and foster care, you can file for the Adoption Tax Credit in multiple years with private domestic adoption.* You're required to file only after you've paid the qualified adoption expenses. Once you finalize an adoption, you'll then file the year expenses were paid.

For example: if an adoptive couple paid qualified adoption expenses in 2015, 2016, and 2017 and then finalizes their adoption in 2017, they will file for 2015 expenses on their 2016 taxes, and the 2016 and 2017 expenses on their 2017 taxes.

Domestic adoption expenses paid before the year the adoption is final are allowable as a credit for the tax year after the year of payment. This is true even if you didn't adopt a baby or child, and also if your child's adoption isn't finalized yet. 

The IRS has created this handy tool that you can utilize to see whether you'll be able to claim the Adoption Tax Credit. You can find their interactive tax assistant at this link: 
IRS.gov/help/ita/am-i-eligible-to-claim-a-credit-for-adopting-a-child-or-to-exclude-employer-provided-adoption-benefits-from-my-employer

As of 2017, adoptive families can claim a credit of up to $13,750 in qualified adoption expenses! This news comes as a relief to many waiting adoptive families, who have been counting on the tax credit to defray some of their adoption costs. Please keep in mind, the amount of the credit you'll be able to receive depends on your income and federal income tax liability. 

If you have further questions about the Adoption Tax Credit and how it can help you, we encourage you to seek a licensed tax professional. You can also learn more by watching Lifetime's webinar all about the Adoption Tax Credit:

tax-credit-webinar.jpg

*Source: Dave Thomas Foundation

Topics: Adoption tax credit