Specifics of the Adoption Tax Credit For Adoptions Finalized in 2014
If your adoption was finalized in 2014 you can claim a federal adoption tax credit of up to $13190 per child. But because the 2014 adoption tax credit is not refundable taxpayers can only get the credit refunded if they have a federal income tax liability.
The credit is paid one time for each adopted child and should be claimed when filing 2014 taxes.
Eligibility for the Adoption Tax Credit
In order to qualify for the credit parents must have adopted a child that is not already a stepchild. The child must be either under 18 years of age or be physically or mentally unable to take care of him or herself.
The parents must also have a modified adjusted gross income that is less than $197880 in order to claim the full tax credit. Parents with incomes greater than $237880 cannot claim the credit. Those whose income falls between $197880 to $237880 can claim partial credit.
What Are Qualifying Adoption Expenses?
According to the IRS qualified adoption expenses are reasonable and necessary expenses paid in connection with and for the principal purpose of legally adopting an eligible child.
Qualified adoption expenses include:
- court costs
- attorney fees
- traveling expenses (including amounts spent for meals and lodging while away from home)
- other expenses directly related to the legal adoption of an eligible child
Qualified adoption expenses DO NOT include expenses:
- for adopting your spouse’s child
- for a surrogate parenting arrangement
- that violate state or federal law
- paid using funds received from a federal state or local program
- paid or reimbursed by your employer or otherwise
- allowed as a credit or deduction on a federal tax return
For documentation purposes be sure to keep all receipts for qualified adoption expenses cancelled checks bank statements entry visas for foreign adoptions final decree certificate or order of adoption home study by an authorized placement agency child placement agreements or court orders and determination of special needs status by a State the District of Columbia or U.S. possession.
Claiming the Adoption Tax Credit
It is always recommended to work with a knowledgeable tax firm like Lindemeyer CPA when you have any out-of-the-ordinary circumstances. We can help ensure you’re receiving all eligible credits available to you especially when it comes to a complicated process like adoption. If you’re currently in the process of adoption and need tax advice or help when it comes to filing 2014 taxes contact us. We will be happy to set up an appointment to get to know your situation better.