To claim this credit, you’ll need Form 8839, Qualified Adoption Expenses, and copies of your adoption papers. TurboTax helps you prepare Form 8839 under the Federal Tax tab, Deductions & Credits, under You and Your Family.
What is the Adoption Credit?
The adoption tax credit provides an incentive to make it easier for individuals or families to adopt a child. A credit for adoption expenses up to $12,650 in 2012 is available for persons adopting a -
- Domestic (US) child under the age of 18
- Domestic special needs child (certified by a state agency)
- A foreign child whose adoption became final in the current tax year
Who qualifies for the credit?
If you finalized an adoption in 2012, you may qualify for the credit. The credit is a one time amount for each adopted child. If you began an adoption in a prior tax year which is not yet final, and had expenses in that year, you may be able to apply those expenses this year against the credit for that child. This reduces the amount of the credit available in later years for that adopted child.
The adoption of a foreign child must be final before you can claim the credit. You can still claim expenses paid in a prior year when the adoption becomes final.
You may receive less than the full amount if some of your adoption expenses are covered by an employer plan or your income is over $189,710.
Adopting a domestic special needs child may qualify to receive the entire credit amount, even if your qualifying expenses were less than the amount of the credit.
What adoption expenses qualify for the credit?
Expenses which qualify for the credit include:
- Adoption fees
- Attorney fees
- Home studies by an authorized placement agency
- Court costs
- Travel expenses including meals and lodging while away from home
- Visas and re-adoption expenses for a foreign child
Expenses for domestic adoptions in a year prior to the adoption becoming final may qualify for a portion of the credit for that child. Keep receipts for all qualified adoption expenses with your records. For additional information on the adoption credit, see IRS Tax topic 607 – Adoption Credit.
How do I file a tax return with the Adoption Credit, and how long does it take?
Because you need to include paper documents about the adopted child, you cannot file your tax return electronically. You must file a paper tax return by mail when including Form 8839, and attach copies of certain adoption documents. TurboTax explains which documents you need to include with your tax return. Note that IRS processing times for the mailed tax return may take one or more extra weeks. Processing times vary because the IRS must verify the submitted documents.