One very important benefit to assist in the financing of your adoption is the IRS adoption tax credit for your tax return (eligibility for the credit is based on your individual tax circumstances). We want to help make sure everyone is taking full advantage of this credit and not letting it go to waste if you have adopted or are in the process of adopting a child.
Our hope is that this information will help you to know how to use the credit, when to use the credit, and what information you’ll need to provide in order to get this credit. For proper handling we recommend that you seek professional advice in the preparation of your tax return when you’re looking to claim this credit. Additionally, should you need help with preparing this credit for your tax return we do have experience in this area and are willing to assist you if you would like.
The credit amount is based on the year your adoption is finalized:
Adoption Tax Credit Amounts
- 2015: $13,400, non-refundable
- 2014: $13,190, non-refundable
- 2013: $12,970, non-refundable
- 2012: $12,650, non-refundable
- 2011: $13,360, refundable
- 2010: $13,170, refundable
- 2009: $12,150, non-refundable
- 2008: $11,650, non-refundable
- 2007: $11,390, non-refundable
- 2006: $10,960, non-refundable
- Everything You Want to Know About the Federal Adoption Tax Credit
- Adoption Tax Credit (About.com)
- American Adoptions Tax Credit Info
- Save The Adoption Tax Credit
Important IRS tax credit information
Often the processing of your tax return and credit refund is delayed due to missing items. Heed this advice to avoid this situation. The dates are old in this link, but there is still some good information listed.
Sometimes you may not be able to get your adopted child’s SSN in time for preparing your tax return where you want to file for the credit. When this occurs you need to obtain an ATIN if you want to claim the child on your return and claim the tax credit. This link provides the information necessary for applying for an ATIN. One important thing to note is that the application process is 4-8 weeks, so plan accordingly.
Not sure what you need to send with your tax return? Check out this link for what’s required when claiming the tax credit. Find more info here:
Many states offer a tax credit or subsidy in addition to the federal tax credit. For example, Wisconsin doesn’t have a credit, but they do have a $5,000 subtraction on the WI tax return that you can take for adoption expenses. There is often an added benefit program for those who adopt children classified as “special needs” (often considered correctable). Sometimes these subsidies can apply to international children. Ask your home study social worker for information of possible state credits.