Expenses and Eligibility

Expenses paid in the year before and the year of an adoption of a child 18 years old or younger are eligible for the adoption tax credit. The credit applies to both domestic and international adoptions, but international adoptions must be finalized. Domestic adoptions expenses may be credited even if the adoption does not go through.

Special Needs

The full adoption tax credit may be taken if the adopted child has special needs, even if the qualifying expenses do not reach the limit.

Forms

You will need to complete IRS Form 8839 for qualifying adoption expenses to receive your tax credit. If you are adopting a U.S. citizen or resident, you will also need to fill out Form W-7A, if you cannot obtain a Social Security number for the child.

State Tax Credits

Many states also offer tax credits or reimbursements for adoption. Check with your state tax office.

Qualifying Expenses

Expenses for which you may receive a credit are adoption fees, court costs, attorney fees, travel expenses while away from home and re-adoption expenses related to adoption of a foreign child.

Non-Qualifying Expenses

Non-qualifying expenses include expenses in connection with surrogate parenting, expenses incurred to adopt the child of the taxpayer's spouse, expenses reimbursed by your employer or other organization, and expenses that would violate federal or state law.

Source:

IRS.gov

Adoption.com

1040.com