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What are the tax benefits of adoption?

On Behalf of | Dec 24, 2018 | adoption, Firm News

When you adopt in Texas, your mind is probably on the new addition to your family. You may prepare a room and prepare your family to welcome a new member. One thing you may not think about is how the adoption impacts your taxes. However, the IRS explains there are actually some tax benefits to adopting a child.

You may qualify for credits for expenses related to the adoption. If you get assistance from your employer, that money may also be exempt from taxation. Of course, the adoption and the child must qualify under IRS rules. For example, if you adopt a stepchild, it does not qualify, but if you have a same-sex domestic partnership, adopting your partner’s child does qualify.

The IRS does place a limit on expenses as well. Your income also affects your ability to claim the credits. Finally, you can only take the credit in the year in which you adopted the child. It does not carryover. The exception is if you get a credit higher than your ta liability. In that case, the credit carries over for up to five years. It is only a credit and no part of it is refundable.

Costs that you might take credit on your taxes for include traveling expenses, fees and attorney costs. Other expenses related to the adoption may also qualify as long as they were expressly related to the adoption. Expenses may occur during the process of adoption or before in preparation for the adoption. This information is for education and is not legal advice.

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