1. Federal Adoption Tax Credit
The federal adoption tax credit is one of the ways families can off-set the cost of adoption.  For 2016, families with incomes under $150,000 dollars are eligible for the full credit of $13,460 dollars.  The credit is phased out completely for those with incomes above $235,000 dollars.  The tax credit is a dollar-for-dollar reduction in the amount of federal taxes owed for the year of filing.

Expenses that qualify towards your adoption tax credit include:

  • Reasonable and necessary adoption fees
  • Court costs
  • Attorney fees
  • Adoption travel expenses

Tax Credit FAQ’s from the Joint Council on International Children’s Services (JCICS)

IRS Federal Adoption Tax Credit Information

2. State Tax Credit
In many states, qualifying for a federal adoption tax credit is the first step toward qualifying for a state-level adoption tax credit. Like a federal income tax credit, a state income tax credit is a dollar-for-dollar reduction in your state income tax obligation. Your state’s tax department office or tax department website is a primary source for current information about state adoption tax credits.

This page is for informational purposes only.  Please consult your accountant or CPA to discuss how you can benefit from federal and state adoption tax credits.