Blog// LGBT Adoption

Are You Eligible For An Adoption Tax Credit?

Because great parents come from all walks of life, it is important that adoption is not exclusive to only the financially strong. Raising a child with love and care is a birthright of every individual, and as long as they can provide a stable loving home, being on the lower end of financial security should not be a limiting factor of adoption.

Because of this reason, there are tax credits available for families with adoptive children, allowing great parents to raise their children to become strong, confident adults. In this article we’ll be exploring the 2018 ‘adoption tax credit’, discovering what it is, how much you can expect to get, as well as who is covered, and how you can claim this credit within your taxes.

What is adoption tax credit?

Essentially, adoption tax credit is a tax credit that is offered to encourage adoption, it aims to offer a credit for specific adoption expenses which are incurred by the individual taxpayer. The most common factors eligible for adoption tax credit include; adoption fees, attorney fees, court costs, travel expenses, and in relation to the adoption of the foreign child, re-adoption expenses.

What do I need to qualify?

There are two basic requirements for qualification for adoption tax credit 2018. The first is that you have adopted a child, other than a stepchild, within the year of 2018. Secondly the child must either be under 18, or, must be physically or mentally dependent on you as their caregiver. If you fit these criteria, it may be worth making inquiries into making a claim. Both domestic and international adoptions qualify, however if you’re fostering you won’t be able to claim.

How much can I expect to get?

The adoption tax credit changes in relation to inflation each year. For 2018, the maximum entitlement is $13,810. Unless your child is deemed as special needs, the amount you will receive will be dependent upon your income and federal tax liability - this is amount you’re liable for in federal income taxes. Typically, the higher you earn the less you’ll be entitled to. For example, those earning $207,140 to $247,140, are only eligible to receive a portion of the credit, and those earning above that amount are ineligible.

It is also worth noting that the adoption tax credit is nonrefundable, so, if your total available credit exceeds your liability, then you’ll need to carry over the difference to pay towards the next tax year.

How to claim

If you have found yourself to be eligible, the next step is to file your claim. To do this, you’ll need to complete irs form 8839 (make sure this is the 2018 edition). This will need to be submitted along with your 1040 form when filing your 2018 taxes. If you have a tax preparer, then they will be able to prepare this for you. As with any documentation, make sure you read the instructions carefully to ensure you receive the correct entitlement.

Further considerations

If you do not qualify for adoption tax credit or you feel you need further support, then you may find, depending on where you live, that your state will offer additional tax credits to you. States included are; utah, north carolina, arizona, and california. Be mindful though, as every state has unique guidelines to follow. It's best to navigate any claim with your adoption attorney or tax professional.

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