Adoption Expense Tax Exclusion
What does Adoption Expense Tax Exclusion mean?
Adopting a child can be very expensive, but there are several state and federal adoption expense tax credits which can be used to offset the expense of adoption. To offset adoption costs families can use the Federal Adoption Tax Credit. For 2013, the maximum adoption tax credit is $12,970, for all qualifying adoption expenses. In January 2013, the Federal Adoption Tax Credit was made permanent.
Certain states also provide adoption tax credit, although the amounts vary by state. The adoption tax credit income limit is recalculated each year and is based on modified adjusted gross income (MAGI). Parents may also be able to get additional help for adoption assistance from their companies who may offer an adoption assistance program. Talk to your employer about your options. Talk to a tax lawyer if you have questions about your qualifying adoption expenses, but generally they can include traveling and any other expenses directly related to the legal adoption of an eligible child. Qualifying expenses must be accrued in a domestic, international or foster care adoption.