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Nine Facts About the Adoption Credit

Adoptive parents around the country may qualify for a tax credit. Parents who either adopted a child or tried to adopt a child may claim the adoption credit.

IRS Tax Tip 2018-05

Here are nine topics you should know about this credit.  See IRS Tax Tip 2018-05 for expanded details on each item.

  • Credit. The credit is nonrefundable. 
  • Credit carryover. Taxpayers can carry any unused credit forward to the next year. 
  • Exclusion. If the taxpayer’s employer helped pay for the adoption…
  • Eligibility. An eligible child is an individual under age 18, or…
  • Special needs child. Special rules apply to taxpayers who adopted an eligible U.S. child with special needs. 
  • Qualified expenses. Adoption expenses must be directly related to the adoption of the child. 
  • Domestic or foreign adoptions. In most cases, taxpayers can claim the credit whether the adoption is domestic or foreign. 
  • No double benefit. Depending on the adoption’s cost, taxpayers may be able to claim both the tax credit and the exclusion, but not both for the same expenses.
  • Income limits. The credit and exclusion are subject to income limitations.

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