Adoption Tax Credit

Two tax benefits are available to offset the expenses of adopting a child.

 For 2008, adoptive parents may be able to claim a credit against their federal tax for up to $12,150 ($11,390 for 2007) of "qualified adoption expenses" (see below) for each adopted child. That's a dollar-for-dollar reduction of tax. Also, adoptive parents may be able to exclude from their gross income up to $11,650 for 2008 ($11,390 for 2007) of "qualified adoption expenses" paid by an employer under an adoption assistance program. The credit is "nonrefundable" (defined below) and both the credit and the exclusion are reduced (phased out) if the parents' income exceeds certain limits (see discussion below). 


Adoptive parents may claim both a credit and exclusion for expenses of adopting a child. But they may not claim both a credit and exclusion for the same expense. 

Additional information