Federal Adoption Tax Credit
Claiming the Federal Adoption Tax Credit for Special Needs Adoptions
Families who adopt a child with special needs from foster care can claim a federal adoption tax credit without needing to incur or document expenses. The per-child tax credit is $11,650 for adoptions finalized in 2008 and $12,150 for those finalized in 2009, and families have six years to use the entire credit.
Are we eligible for the credit?
To qualify for the credit without documenting expenses, families must:
Families who adopt a child with special needs from foster care can claim a federal adoption tax credit without needing to incur or document expenses. The per-child tax credit is $11,650 for adoptions finalized in 2008 and $12,150 for those finalized in 2009, and families have six years to use the entire credit.
Are we eligible for the credit?
To qualify for the credit without documenting expenses, families must:
- have adopted a child with special needs from foster care
- have a modified adjusted gross income of a certain level
Then to be able to use the credit, families must also have federal tax liability.
Does my child have special needs?
Children who are harder to place for adoption - older children, children of color, sibling groups and children with medical conditions or disabilities - are often determined to have special needs. NACAC interprets the IRS instructions to mean that if a child receives adoption subsidy (assistance), the adoption subsidy agreement (or application and agreement) is evidence that the state has determined that child has special needs.
If you have additional questions on the Adoption Tax Credit or adoption subsidy, contact the North American Council on Adoptable Children at 651-644-3036 or adoption.assistance@nacac.org.