Adoption Tax Credit 2019

If you have adopted within the last several years or even if you are in the process of adopting, you need to understand the Adoption Tax Credit for 2019. We talk with Becky Wilmoth, an Enrolled Agent and Adoption Tax Credit Specialist with Bills Tax Service in Illinois and Josh Kroll, Adoption Tax Credit specialist at the North American Council on Adoptable Children (NACAC).

Hit the Highlights
  • For 2019, the Adoption Tax Credit for qualified adoption expenses is $14,080 for each child adopted, whether via public foster care, domestic private adoption, or international adoption.
  • 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?
  • If you don’t have any federal tax liability, should you still “take” the credit?
  • What type of adoptions are included or excluded? Stepparent adoption? Embryo adoption? Same-sex partner second parent adoption? Unmarried heterosexual second parent adoption? Surrogacy?
  • 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 cost for advertising or looking for an expectant mom considered a qualified adoption expense?
    • Are the cost of an adoption consultant allowed?
    • Are failed domestic adoption attempt expenses allowed under the Adoption Tax Credit?
    • Can you take the adoption tax credit for a failed adoption and then take it again when you successfully adopt?
    • Are different expenses considered a “qualified adoption expense” for a failed adoption compared to a completed adoption.
    • Are failed international adoption expenses allowed under the Adoption Tax Credit?
  • When can you claim the Adoption Tax Credit?
    • Domestic infant adoption
    • Re-adoption in the US for international adoption
    • Foster Care Adoption
  • Special Needs Adoption: How does the Adoption Tax Credit differ for adoptions from foster care?
  • Special needs child for international adoption?
  • What income level is excluded from claiming the Adoption Tax Credit in 2019?
  • 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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Music credit: Michael Ashworth

Image credit:  Steve Buissinne