The personal rewards of adoption are limitless. New parents unable to conceive have an opportunity to start a family. Parents who already have sons and daughters can add to their family and give children a home.
With all children come financial responsibilities for birth and adoptive parents, specifically the costs involved in the legal process. Adopting a child is a significant commitment in many ways.
Combined with the emotional gifts are additional benefits. Tax credit is available for newly adoptive parents. Claimed expenses are subject to Internal Revenue Service guidelines and based on the tax year costs were paid, the time the adoption was finalized, and the adopted child being a US citizen/resident or foreign-born.
You may be eligible for up to $13,400 per child this year.
Securing the credit requires diligence and a hard copy tax filing. Tax software and the IRS Free File program can still be used for preparation. While not required, you can also submit the final adoption decree, placement agreement, and a state’s determination for a special needs child.
Financial help from your employer will allow you to avoid paying tax on up to $13,400 of their adoption benefit. While potentially doubling the credit, you cannot write off the same expense twice.
As with any tax-related matter, consult with the IRS or a professional. With or without a tax credit, the adoption process is complex and requires the help of an experienced and knowledgeable attorney.