This is
for all qualified adoption expenses in the year the family finalizes
their adoption. We recommend families consult a tax professional
regarding their tax needs.
PLEASE NOTE:
Current tax filing for the 2007 tax season provided for $11,390 adoption
tax credit. We strongly recommend adoptive families consult a legal or
tax professional for more details.
What is the Hope For
Children Act?
The Hope for
Children Act (Public Law 107-16) provides tax credit for “qualifying
adoption expenses” to $11,390. (2007) It also increases the
employer adoption assistance exclusion to $10,000.
When did the Federal
adoption tax credit go into effect?
The Hope for Children Act is
effective January 1, 2002.
What are ‘qualified
adoption expenses?
According to the IRS: “Reasonable and
necessary adoption fees, court costs, attorney fees, traveling expenses
(including meals & lodging) and other expenses related to, and whose
principal purpose is for, the legal adoption of an eligible child.”
Who qualifies for the
tax credit?
In 2008 persons with modified adjusted gross incomes
of $174,730 or less, phasing out for modified adjusted gross incomes up
to $214,730.
Do all adoptions
qualify for the tax credit?
Non-special needs domestic adoptions
and FINALIZED international adoptions qualify.
Overseas adoptions
must be finalized in order to be legal and deemed a U.S. citizen.
What about special
needs adoptions?
Domestic special needs adoptions are defined as
children who are U.S. citizens and determined by the state of residence
to qualify for financial subsidy for adoption.
How does the tax
credit work for international adoptions?
International adoptions
must be finalized. While some adoptions are finalized in the child’s
country of birth, state law in the United States governing finalization
varies. All states do not recognize “adoption finalization” overseas,
requiring families in those states to re-finalize the adoption to
qualify for the tax credit.
Can families claim the
full credit over multiple years?
Yes, the credit can be applied
against tax liability over six years or whenever expenses reach the
$11,650 cap (2008), whichever comes first.
PLEASE NOTE:
The IRS states that the 968 Publication will be similar with changes in
language to reflect the $11,650 tax credit (2008).
