adoption tax credit
Fertility

2022 | How Does the Adoption Tax Credit Work?

The federal adoption tax credit is a nonrefundable credit available for tax liable people that have paid out-of-pocket expenses to adopt either a child under the age of 18 and/ with special needs. For 2022, ATC amount available is $14,890 per child. In this article, you will learn how the adoption tax credit works and discover answers to popular questions about the tax credit.

How Does the Adoption Tax Credit Work?

  • When filing their tax return, a family with a finalized adoption, can apply this credit toward their federal tax liability. This credit can reduce what the family owes in federal income tax.
  • To claim the adoption tax credit (ATC), you must file IRS Form 8839, which includes specific information about the child’s adoption.
  • If the child, by adoption, does not have a social security number yet, the filer can use an adoption taxpayer identification number (ATIN).
  • If you do not use all of the credit in the first year, you can carry it forward for up to five years.
adoption tax credit

What expenses the adoption credit reimburse?

  • adoption fees
  • agency fees
  • court costs
  • attorney fees
  • travel expenses (including meals and lodging away from home)
  • re-adoption expenses related to the adoption of a foreign child

What expenses does the ATC NOT cover?

  • the cost of adopting spouse’s child
  • any expenses that violate state laws
  • any expenses which taxpayer received funds for from any state, local, or federal program
  • cost of surrogate parenting arrangement
  • costs otherwise allocated as a deduction or credit

Related Post:

Gift of Adoption | Adoption Grants

Who is eligible for the adoption credit?

  • Taxpayers whose filing status is: single, Head of Household (HOH), qualified widow(er), or Married Filing Jointly (MFJ).
  • Have finalized an eligible adoption.
  • Must have tax liability.
  • Must have a combined income of LESS THAN $223,410 (for2022 taxes).

What is an eligible adoption?

  • Adoption of a child under the age of 18. (If child turns 18 before adoption is finalized, only adoption expenses incurred before they turned 18 are eligible.)
  • Adopting a child with special needs. (Even if adoptive family did not pay the full eligible amount for the adoption of a special needs child, they are still eligible for the FULL amount of ATC.)

What is a tax liability?

  • A tax liability is the amount of taxes OWED to the federal, state and local governments.

How many years can you apply for the adoption tax credit?

  • 5 years.
  • You may reapply for the ATC with eligible expenses for up to five years or until the FULL AMOUNT of available credit is claimed.

Does employee/military reimbursement for adoption effect eligibility for the tax credit?

  • No.
  • As long as the credit/reimbursements are not covering the same adoption expenses, both may be used to their full amount.
adoption tax credit

How to apply for the adoption tax:

  • RECOMMENDED: Talk to or hire a CPA (VERSED IN ADOPTION TAX) to file your taxes. Doing so will ensure you are getting your maximum tax return.

Can you apply for the credit through self-filing companies (such as: TaxAct or TurboTax)?

  • Yes. There is an option to apply the adoption tax credit. This will lead you through more documentation. However, consulting one of the live CPA’s on these sites is recommended.

Adoption Tax Credit Information for 2022:

How much credit is available?

  • $14,890 (Able to continue claiming ATC for 5 years with eligible expenses OR until this amount is reached.)

What is the phase-out MAGI (modified adjusted gross income) amount for 2022?

  • $223,410 (If your household’s MAGI is MORE than that amount, you are INELIGIBLE for the ATC.)

I hope this article clarified any questions you had about the adoption tax credit! Have another question? Please leave it in the comments!

step by step adoption guide

Have you been thinking about adoption, but don’t know where to start?

Or maybe you have started doing some research on the process and are starting to get overwhelmed by the extensive and expensive process?

Do you wish that there was an adoption guide out there to help get you started?

Do you wish that the adoption guide that got you started also included DETAILED instructions as to how to EASILY navigate the ENTIRE process AS WELL AS show you how YOU really can afford adoption??

Well…NOW THERE IS!

Struggle Shuttle has collaborated with adoption attorneys, adoption social workers, adoption agents, as well as several other adoption professionals in order to provide America’s #1 BEST, most complete, step-by-step adoption guide WITH support to help people like you navigate the adoption process with ease and help you to start your family!

You can search, but there isn’t another course out there that is this in-depth and provides this detailed and complete of a guide!

In this course, you will learn:

  1. How to choose the perfect adoption agency
  2. About the different types of adoption
  3. What to expect as an adoptive parent
  4. How to prepare for a successful home study
  5. How to make an EFFECTIVE adoption profile-  INCLUDING pre-written profile letters!
  6. How to self promote
  7. What to expect when meeting with birth mothers
  8. Preparing for the hospital
  9. What to expect during the wait between birth and finalization
  10. What to expect at finalization
  11. How to finance adoption- it IS possible for adoption to become easily affordable
  12. Access to private FB group for mentorship, support and feedback!

So what are you waiting for??

Let me guide you through the entire process and turn stress into success! 

Stop your adoption struggles now!

Let’s start the journey to your baby today!

Get started with your complete adoption guide to private infant adoption HERE!

I can’t wait to be on this journey with you!

bri
.
Share/Like/Follow:

10 Comments

  • Harashail

    “Nice info!” The Adoption Tax Credit can significantly offset the costs and fees of an adoption process, but prospective adoptive parents need to ensure they understand the basics before determining how much it can help them.

    Thanks for sharing this information.

    • Bri

      Yes, there is a federal tax reimbursement. Also, most states have a separate reimbursement. If he/she works for an adoption friendly company, the company may also reimburse up to a certain amount. Then there are several grants that can be applied for as well. Adoption expenses can be super scary when you first see the numbers if you don’t know about these financial reimbursements!

Leave a Reply

Your email address will not be published. Required fields are marked *

close
We use cookies in order to give you the best possible experience on our website. By continuing to use this site, you agree to our use of cookies.
Accept