Life changes
You Adopted a Child: The Adoption Credit and Your Return
Adoption brings its own credit on top of the usual benefits for a child. Timing is the part most families get wrong, so keep every receipt and the court dates together.
Reviewed by LaToya Clark-Thompson, FounderLast updated
What changes on your return
An adopted child is treated exactly like a child born to you for the dependency rules, the child tax credit, the earned income credit and head of household status. On top of that, you may qualify for the adoption credit, claimed on Form 8839.
The adoption credit covers qualified adoption expenses up to a per-child limit that is adjusted each year, and it phases out at higher incomes. Under current law, part of the credit is refundable, which means a family can receive some of it even if they owe little or no tax. The rest is nonrefundable and can carry forward for later years. If your employer has an adoption assistance program, those benefits may be excluded from your income, and they show on your W-2 in box 12 with code T.
Which expenses count, and when
Qualified expenses are reasonable and necessary costs of a legal adoption: adoption agency fees, court costs, attorney fees, and travel (including meals and lodging) while away from home for the adoption. Costs of adopting your spouse’s child do not qualify, and neither does a surrogacy arrangement.
Timing depends on the type of adoption:
- Domestic adoption: expenses paid before the adoption is final are generally claimed the year after you pay them; expenses paid in the year it becomes final, or later, are claimed in the year paid.
- Foreign adoption: expenses are claimed only once the adoption is final.
- Child with special needs, as determined by the state: a domestic adoption may qualify for the full credit when it becomes final, even if expenses were low.
What to bring to your appointment
- The final adoption decree, or any interim court orders if it is not yet final
- Receipts and invoices for agency, attorney and court fees, with dates paid
- Travel records for adoption trips
- Your W-2, especially box 12 code T if your employer paid adoption benefits
- Your child’s Social Security number, or an Adoption Taxpayer Identification Number (ATIN) if the Social Security number is not available yet
- Any state determination that the child has special needs
- Prior returns if you claimed adoption expenses or have a carryforward
Common mistakes
- Claiming domestic expenses in the year paid when the adoption was not yet final, instead of the following year
- Counting the same expense under both an employer program and the credit
- Forgetting a carryforward from an earlier year’s unused credit
- Waiting to file because the Social Security number is pending, when an ATIN (Form W-7A) can be used in the meantime
When it is worth having a preparer
Most families claim the adoption credit only once, so the timing rules and paperwork are unfamiliar. If expenses spread over several years, the adoption is international, or your employer helped pay, it is worth having us sort the dates and prepare Form 8839. If you already filed and missed the credit, an amended return can often still claim it, and our free prior-year review is a no-cost way to check. Book through tax preparation.
Frequently asked questions
When can I claim the adoption credit?
It depends on whether the adoption is domestic or foreign and whether it is final. For a domestic adoption, expenses paid before the year it becomes final are generally claimed the following year, and later expenses in the year paid. For a foreign adoption, nothing can be claimed until the adoption is final. Bring your receipts with the dates paid and we sort them by year.
Is the adoption tax credit refundable now?
Partly. Under current law a portion of the adoption credit is refundable, so you can receive it even if you owe little or no tax. The remaining portion is nonrefundable and can be carried forward to later years if you cannot use it all at once. The refundable limit is set by law and adjusted, so we apply the figure for the year you file.
What is an ATIN and do I need one?
An Adoption Taxpayer Identification Number is a temporary number the IRS issues, through Form W-7A, for a child placed with you for adoption when you cannot yet get a Social Security number. It lets you claim the child as a dependent in the meantime. Once the adoption is final, apply for the Social Security number and use it going forward.
Does adopting a stepchild qualify for the adoption credit?
No. Expenses to adopt your spouse’s child are specifically excluded from the adoption credit. The child can still be your dependent and qualify you for the child tax credit and other benefits if the usual tests are met. Other adoptions of a relative, such as a grandchild, can qualify, so tell us who the child is and how the adoption came about.
Not the question you had? The full tax FAQ covers more ground, and our client reviews say what the work is actually like.
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