If you are adopting a child in 2011, you may wish to familiarize yourself with the adoption tax credit. Here is an overview of this valuable tax credit:

  1. The adoption tax credit, which is as much as $13,170, offsets qualified adoption expenses, making adoption possible for some families who could not otherwise afford it. Taxpayers who adopt a child in 2011 may qualify if they adopted or attempted to adopt a child and paid qualified expenses relating to the adoption.
  2. Taxpayers with modified adjusted gross income of more than $182,520 may not qualify for the full amount and it phases out completely at $222,520. Note these values are the 2010 values and may be adjusted slightly for 2011.
  3. You may be able to claim the credit even if the adoption does not become final. If you adopt a special needs child, you may qualify for the full amount of the adoption credit even if you paid few or no adoption-related expenses.
  4. Qualified adoption expenses are reasonable and necessary expenses directly related to the legal adoption of the child who is under 18 years old, or physically or mentally incapable of caring for himself or herself. These expenses may include adoption fees, court costs, attorney fees and travel expenses.
  5. To claim the credit, you must attach documents supporting the adoption. Documents may include a final adoption decree, placement agreement from an authorized agency, court documents and the state’s determination for special needs children. Failure to include required documents will delay your refund.

If you are considering or are in the process of adoption and would like additional details on this very substantial credit, please give this office a call.

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