Fact Sheet: Adoption Credit



What it is:  A non-refundable credit you can apply to your taxes worth up to $5000.00 (or $6000.00 for special needs children) for certain expenses you incur in adopting a child.


How to get it:  File either a Form 1040 or a Form 1040A.  Attach a Schedule 8839, and make sure you satisfy the rules for the credit.  If your employer paid part of the adoption expenses for you, fill out the back of the Form 8839 (Part III).  Employer paid expenses are not taxable up to $5000.00 (or $6000.00 for special needs children), but will reduce the credit you can claim.




1) The child must be under age 18 or mentally or physically incapable of self-care;


2) Only certain expenses qualify for the credit: adoption fees, court costs, attorney’s fees, travel expenses (including food and lodging), and other expenses directly related to the adoption.  Surrogate parenting expenses do not apply; nor to the expenses associated with the cost of a step-parent adoption.


3) If you adopt a U.S. citizen, you can claim credit for the expenses in the tax year after they were incurred until the adoption is final; so on your 2000 tax return, you can claim the expenses you incurred in 1999.  When the adoption is final, you can claim the credit on the tax return for year the year when the adoption became final.  If you adopt a foreign child, you can only claim the expense for the year when the adoption is final.  If the adoption of a foreign child is not finalized, you cannot claim credit for those expenses.


4) 2001 is the last year you can claim the Adoption credit for a child without special needs.


5) If you have more expenses for the credit than you can claim this year, you can claim the unused portion in later years for up to five years.


6) You can’t claim the credit if you are married filing separately.


7) If you have income of more than $75,000.00, the credit will be reduced.  If you have income of more than $115,000.00, you cannot claim this credit.


8) The child you are claiming the credit for must have a valid social security number or individual or adoption taxpayer identification number (ITIN or ATIN).  You can apply for an ITIN or an ATIN by filing Form W-7 for an ITIN, or Form W7A for an ATIN before you file your tax return.