Hi, I'm Richard from TurboTax. If you are in the process of adopting a child
or even considering it, you should know that there is a federal tax credit that can save
you money on your taxes. Some of the adoption expenses that qualify
for the credit include court and attorney fees, traveling expenses, adoption agency
fees and any other expenses directly related to legally adopting an eligible child. However, if your employer reimburses or pays
you for any of the costs, you can't include that in your credit. This also applies to financial aid you receive
from the government or other organizations. The total credit you can apply for is limited
by your total income. It's also cumulative. In other words, if you are eligible to claim
$5,000 in one year, you can only claim the remaining amount of the credit in future years. See the TurboTax article “New Addition:
Adoption Tax Credits” for the current limits. The credit is nonrefundable, meaning that
it’s limited to your total tax liability for the year, and you will not receive a refund
check if the credit exceeds that amount. But any credit in excess of your tax liability
may be carried forward for up to five years. If you are adopting an eligible child who
is a US citizen or US resident, then adoption expenses paid before the year the adoption
becomes final should be claimed in the year after you paid them. The only exception is if you paid in the year
the adoption was finalized or afterwards. Then you can claim those expenses in the same
year you paid them. For foreign adoptions, you can only claim
the credit during the year the adoption is finalized or the year of payment at the time
the adoption is finalized. One more thing! You can still take the adoption credit, even
if you never finalize the adoption. However, you will only qualify for the credit
in this situation if the child you try to adopt is a U.S. citizen or resident. For more information about this and other
tax topics, visit TurboTax.com.

Author Since: Mar 11, 2019

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