What is the Adoption Tax Credit and how can adoptive parents claim it on their 2018 taxes? How much is the Adoption Tax Credit and what types of adoption are covered? Host Dawn Davenport, Executive Director of Creating a Family, the national infertility & adoption education and support nonprofit, interviews Rebecca Wilmoth and Josh Kroll about the Adoption Tax Credit 2018.

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Hit the Highlights
The tax code provides an adoption credit of up to $13,810 of qualified adoption expenses (in 2018) for each child adopted, whether via public foster care, domestic private adoption, or international adoption.

  • The amount for 2018 is $13,810. It is a non-refundable tax credit. What is a “credit” and how does it differ from a deduction or some other form of tax savings?
  • If you get a tax refund every year, how would you use the Adoption Tax Credit?
  • What type of adoptions are included or excluded? Stepparent adoption? Embryo adoption? Same-sex partner second parent adoption? Unmarried heterosexual second parent adoption?
  • Can you get credit for each adoption you complete even if completed in the same year? What about adopting siblings at the same time?
  • What is a Qualified Adoption Expense for purposes of the Adoption Tax Credit?
    • Are birth mother expenses (or expectant mother expenses) allowed as a qualified adoption expense?
    • Are failed domestic adoption attempt expenses allowed under the Adoption Tax Credit?
    • Are failed international adoption expenses allowed under the Adoption Tax Credit?
  • When can you claim the Adoption Tax Credit?
    • Domestic infant: If we have adoption expenses during 2018, but do not finalize an adoption in that year can I claim those expenses for my 2018 return or do I have to wait until my 2019 return?
    • International
    • Foster Care
  • Special Needs Adoption: How does the Adoption Tax Credit differ for adoptions from foster care?
  • What income level is excluded from claiming the Adoption Tax Credit in 2018?
  • What if you can’t use all the credit in one year because you don’t have $13,810 in federal tax liability? How long can the credit be carried over?
  • Will the Adoption Tax Credit offset self employment tax or will it only offset income tax liability? How are employer benefits for adoption handled for tax purposes under the Adoption Tax Credit?
  • How does the Adoption Tax Credit work in conjunction with employer benefits?
  • What type of documentation should you submit with your taxes? What type of documentation should you keep in your records?
  • What should you do if you do not have your child’s social security number when you get ready to file your taxes? When should you consider using an Adoption Taxpayer Identification Number (ATIN #) or Individual Taxpayer Identification Number (ITIN #)?
  • How does the Adoption Tax Credit work with kinship adoptions? What if the child never was involved with the foster care?
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Image credit: Earl