This is not a substitute for professional financial advice and should not be relied upon without consulting your tax advisor.
If you had adoption-related income and/or expenses, any one or a combination of benefits, credits and exclusions could substantially reduce your tax liability.
NOTE: The tax credit does not cover expenses for adoption of a spouse's child (stepparent adoption).
The Adoption Tax Credit is a valuable benefit for adopting families, but one of the most complicated tax law provisions applicable to middle-income families. The details of how it works, acceptable expenses, who qualifies, and other "small print" items have been harder to understand.
The following information is presented in two parts:
The first step is to learn what the tax credit covers, and how it works with other incentives, such as employer-paid adoption benefits.
Then, you'll want to
Form 8839 is the form you need to file. The form will include expenses covered by the Adoption Tax Credit, any payments or reimbursements you may have received from Employer Adoption Assistance Benefits, and your child's Social Security or Tax ID number (required for filing).
Many states provide reimbursement of a certain amount of non-recurring adoption expenses. Be sure to check with your state tax office to learn more about it, and contact your local IRS office if you need more information or direct assistance with preparing your tax return.
Finally, consult your own tax advisor to make sure you haven't overlooked anything!