Adoption Tax Credit 2020

How can you take full advantage of the Adoption Tax Credit? What changes are important when filing for this credit for your 2020 taxes. We talk with Becky Wilmoth, an Enrolled Agent and Adoption Tax Credit Specialist with Bill’s Tax Service and Josh Kroll, the Adoption Subsidy Resource Center coordinator at the North American Council on Adoptable Children.

In this episode, we cover:

  • What is the Adoption Tax Credit for adoption being claimed on 2020 federal taxes $14,300
  • It is a non-refundable tax credit. How to advocate for refundability.
  • 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 apply the credit to your federal income taxes? 
  • 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?
  • When can you claim the Adoption Tax Credit?
    • Domestic Infant Adoption
    • International 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 2020?
  • 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 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?
  • What are the most common questions received about the Adoption Tax Credit?
  • How to find a tax specialist knowledgeable on the Adoption Tax Credit?

Don’t miss an episode. Be sure to subscribe.

Music Credit: Michael Ashworth

Image Credit: Karolina Grabowska from Pexels