1. TurboTax /
  2. Tax Calculators & Tips /
  3. Tax Tips Guides & Videos /
  4. Family /
  5. New Addition: Adoption Tax Credits

New Addition: Adoption Tax Credits

Updated for Tax Year 2018


OVERVIEW

Adoptive parents may spend up to $30,000 adopting a child. However, an available tax credit offers some relief to many, if not most, adoptive parents.


The adoption process can be extremely cumbersome and expensive. According to the Evan B. Donaldson Adoption Institute, a national not-for-profit organization devoted to improving adoption policy and practice in the United States, adoptive parents may spend up to $30,000 before all requirements are met and all fees are paid.

An available tax credit, however, offers some relief to many, if not most, adoptive parents.

The adoption tax credit

The IRS consolidates a majority of the reporting for adoption-related expenses on Form 8839, Qualified Adoption Expenses. Filers must include every qualified expense from the tax year in question on that form to be eligible for the adoption tax credit.

  • For 2017, the maximum credit adoptive parents are granted is $13,840 per eligible child.

An eligible child is defined as any person who is under the age of 18 or any person who—regardless of age—is physically or mentally unable to take care of him- or herself.

Any reasonable and necessary expenses directly related to the legal adoption of any child are eligible for reimbursement or refund through the adoption tax credit. Those expenses include:

  • court costs and attorney fees
  • home studies
  • and any traveling expenses related to the adoption

The credit is a non-refundable credit which means that it can lower your tax bill but will not produce a refund due to the credit. However, if the entire credit is not used, any remaining amount can be carried forward for up to five years.

However, adoptive parents should not automatically assume they qualify. The ceiling amount of the adoption credit is available only if you spent that amount in qualified adoption expenses which were not reimbursed by an employer or state agency or if the adopted person is one with special needs.

  • If you spent less than the cap, you will receive a credit for only for the amount you spent.
  • In addition, if your modified adjusted gross income is more than $207,580,  your credit is reduced until modified adjusted gross income is $247,580 or more, when the credit is no longer available.

Special needs credit

Couples and individuals adopting a child whom the federal government considers one with special needs may claim the maximum amount of the adoption tax credit regardless of how much they spent for adoption-related expenses.

A child is classified as being one with special needs if each of three conditions exist:

  • The child is a citizen or resident of the United States;
  • The child should not, or could not, be returned to the birth parent’s home; and
  • The child probably would not have been adopted unless assistance was provided.

Parents should review their adoption paperwork and also try checking with their state agency or social worker if they aren’t sure if the child qualifies in the special needs category.

Once your child is adopted and you have claimed the adoption tax credit, there are no additional federal tax benefits available for adoptive parents. Your children are treated as your children from that point on.

Unsuccessful adoptions

Jeremy Rospierski, an accounts receivable coordinator for Lutheran Social Services of Michigan, is the adoptive father of a 1-year-old child. If you were on the path to becoming an adoptive parent but were derailed for whatever reason, Rospierski says, you may claim expenses for an unsuccessful attempt to adopt an U.S. child. You should treat them in the same manner as expenses paid for adoptions not final by the end of the year.

Employer-provided adoption benefits

A taxpayer may be eligible for employer-provided adoption benefits. According to the IRS, employer-provided adoption benefits are amounts your employer paid for qualified adoption-related expenses to you directly or to a third party on your behalf. You may exclude these benefits from your taxable income up to $13,840 for 2018. But you cannot use the same expenses for the exclusion as you do for the credit. You can, however, exclude up to the maximum allowable and then take the maximum credit for additional unreimbursed expenses.

Substantiating expenses

You will need a copy of the adoption certificate signed by the judge. This should show the name of the child and the adoptive parents along with the seal of the court.

Adoptive parents should expect to substantiate any expenses they’re hoping to claim for the adoption credit and if you’re claiming a credit for adopting a special needs child,  you must send the IRS a copy of the determination of special needs from your state.

  • that can be a signed adoption assistance or subsidy agreement by the state
  • a state-issued or county-issued certificate of verification that the child has special needs
  • or a certificate that the child is approved to receive adoption assistance.

Delayed refunds

Form 8839 can be e-filed or mailed, but expect the processing of your income tax return to take longer if you mail it.

It takes 2-3 weeks for a refund to be sent when it is electronically filed, but 5 - 8 weeks when mailed.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $59.99$39.99*
Start for Free

Looking for more information?

* Important Offer Details and Disclosures
  • TURBOTAX ONLINE/MOBILE

  • Try for Free/Pay When You File:TurboTax online and mobile pricing is based on your tax situation and varies by product. $0 federal (for simple tax returns) + $0 state + $0 to file offer only available with TurboTax Free Edition; offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase. Special discount offers may not be valid for mobile in-app purchases.
  • QuickBooks Self-Employed Offer with TurboTax Self-Employed and TurboTax Live Self-Employed: To receive your complimentary subscription to QuickBooks Self-Employed through 4/30/20, you must pay for your 2018 TurboTax Self-Employed or TurboTax Live return by 4/15/19 and sign-in and access your QuickBooks Self-Employed account via mobile app or at https://selfemployed.intuit.com/turbotax at least twice by 7/15/19. You will have the option of renewing your QuickBooks Self-Employed subscription by 4/30/20 for another year at the then-current subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section. See QuickBooks.com for price comparison. Offer not valid for existing QuickBooks Self-Employed subscribers already on a payment plan.
  • Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15.3%) for tax year 2018. Actual results will vary based on your tax situation.
  • Anytime, anywhere: Internet access required; standard data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • TurboTax Live Reviews: Displayed reviews are for the TurboTax Live standalone service from Tax Year 2017 and not for the new Turbo Tax product / TurboTax Live bundle available for Tax Year 2018.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Help and Support: Access to a TurboTax specialist is included with TurboTax Deluxe, Premier, Self-Employed and TurboTax Live; not included with Free Edition (but is available as an upgrade). TurboTax specialists are available to provide general customer help and support using the TurboTax product. SmartLook on-screen help is available on a PC, laptop or the TurboTax mobile app. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Advice, Expert Review and TurboTax Live: Access to tax advice and Expert Review (the ability to have a Tax Expert review and/or sign your tax return) is included with TurboTax Live or as an upgrade from another version, and available through December 31, 2019. These services are provided only by credentialed CPAs, EAs or tax attorneys. Some tax topics or situations may not be included as part of this service, which shall be determined in the tax expert’s sole discretion. In the event your return is reviewed by a tax expert and requires a significant level of tax advice or actual preparation, the tax expert may be required to sign your return as the preparer at which point they will assume primary responsibility for the preparation of your return (payment by the federal refund not available when tax expert signs your return). On-screen help is available on a desktop, laptop or the TurboTax mobile app. Unlimited access to TurboTax Live CPAs and EAs refers to an unlimited quantity of contacts available to each customer, but does not refer to hours of operation or service coverage. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Return Access, Smart Insights and My Docs features: Included with TurboTax Deluxe, Premier, Self-Employed, TurboTax Live or with PLUS benefits. Access to all tax-related documents we have on file for you is available through 10/31/2020. Terms and conditions may vary and are subject to change without notice.
  • Easy Online Amend: Included with TurboTax Deluxe, Premier, Self-Employed, TurboTax Live or with PLUS benefits. Make changes to your 2018 tax return online for up to 3 years after it has been filed and accepted by the IRS through 10/31/2021. Terms and conditions may vary and are subject to change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2017 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • #1 rated online tax prep provider: Based on independent comparison of the best online tax software by TopTenReviews.com January 29, 2018.
  • Get tips from Turbo based on your tax and credit data to help get you to where you want to be: Tax and credit data accessed upon your consent.
  • TURBOTAX GUARANTEES

  • 100% Accurate Calculations Guarantee: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we’ll pay you the penalty and interest.
  • Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Online Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid.
  • 100% Accurate Expert Approved Guarantee: If you pay an IRS or state penalty (or interest) because of an error that a TurboTax CPA, EA, or Tax Attorney made while providing topic-specific tax advice, a section review, or acting as a signed preparer for your return, we'll pay you the penalty and interest.
  • Audit Support Guarantee: If you received an audit letter based on your 2018 TurboTax return and are not satisfied with how we responded to your inquiry, we’ll refund the applicable TurboTax federal 1040 and/or state purchase price you paid. TurboTax Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. We will not represent you or provide legal advice. Excludes TurboTax Business.
  • TurboTax Free Guarantee: $0 Federal + $0 State + $0 To File offer is available for simple tax returns with TurboTax Free Edition. A simple tax return is Form 1040 only, with no attached schedules.
  • Satisfaction Guaranteed:
    • If you use TurboTax Online or Mobile:
      Satisfaction Guaranteed — or you don't pay. You may use TurboTax Online without charge up to the point you decide to print or electronically file your tax return. Printing or electronically filing your return reflects your satisfaction with TurboTax Online, at which time you will be required to pay or register for the product.
    • If you bought or downloaded TurboTax from a retailer:
      Try TurboTax software. If you're not satisfied, return it to Intuit within 60 days of purchase with your dated receipt for a full refund.
    • If you bought or downloaded TurboTax directly from us:
      Try TurboTax software. If you're not satisfied, return it within 60 days of shipment with your dated receipt for a full refund (excluding shipping & handling).
  • TURBOTAX CD/DOWNLOAD

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2017 TurboTax products.
  • Data Import: Imports financial data from participating companies; may require a free Intuit online account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2016 and higher) and QuickBooks Desktop (2014 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.