Federal Adoption Tax Credit
Updated October 2014
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Please note: The adoption tax credit is a one-time credit per child. If you have received your adoption tax credit for an adoption, you do not apply for an additional adoption tax credit in future years.
Since 2003, families who adopted a child with special needs from foster care could claim a federal adoption tax credit even if they had no adoption expenses. Children who receive adoption assistance/subsidy benefits are considered children with special needs. Other adoptive families are also eligible for the credit, but must have (and be able to document, if requested by the IRS) qualified adoption expenses.
The tax credit was refundable for 2010 and 2011, but not for 2012 or future years. A refundable tax credit is one you get back regardless of what you owe or paid in taxes for the year. When the credit is not refundable, you receive only what you have in federal incomet tax liability.
As of October 16, 2015, those who adopted in 2011 or earlier will not benefit.
The amount of the credit is based on the year the adoption finalized:
The credit is claimed one time for each adopted child with special needs.
Below, we explain the basics of the adoption tax credit.
To be eligible for the credit, you must:
- Have adopted a child other than a stepchild — Children who receive a monthly adoption subsidy payment have been determined by the state to have special needs, so these children are eligible for the full tax credit without documenting expenses. Families who adopted children without special needs are also eligible, but need to have (and be able to document, if asked) qualified adoption expenses.
- And be within the income limits — How much of the credit you can claim is based on income. For 2015, families with a federal modified adjusted gross income above $241,010 cannot claim the credit; families with incomes above $201,010 can claim part credit. Anyone with incomes below the lower amount should be able to claim the full credit. (Adoptions from previous years had different income limits; 2016 income limits will be $241,920 and $201,920.)
If You Adopted in 2015
You will claim the credit when you file your 2015 taxes next year. Read our fact sheet for more information.
If You Adopted in 2014
You will claim the credit when you file your 2014 taxes next year. Read our fact sheet for more information.
If You Adopted in 2013
You need to amend your 2013 taxes. Read our fact sheet for more information.
If You Adopted in 2012
You will need to amend your 2012 taxes. Read our fact sheet for more information.
If You Adopted in 2011 or earlier
The tax year 2011 is closed for everyone, even those who filed an extension on their 2011 taxes. So any adoptions that finalized in 2011 or earlier are no longer able to file for a refund
Below are links to a number of resources for adoptive families.
NACAC's resources focus on adoptions of children with special needs from foster care, but may also be of use to other adoptive families.