Claiming Adoption Tax Credit

How to claim the adoption tax credit?

To claim the adoption tax credit, you must complete the Form 8839, Qualified Adoption Expenses. On the form, you must give the child's:

• name
• year of birth
• identifying number (social security number, an individual taxpayer identification number (ITIN) or an adoption taxpayer identification number (ATIN)

Carrying over adoption tax credit to future years

If you cannot claim the full amount of the adoption tax credit because the amount of your credit exceeds your tax, you can claim the unused amount of the credit over the next five years or until it is used up whichever comes first.

What is the income exclusion for claiming adoption tax credit?

If your employer pays or reimburses your adoption expenses under an adoption assistance program, you may be able to exclude the assistance from your gross income. Employer-provided adoption benefits will be shown in box 12 of your W-2 from the code T. The exclusion limits are the same as the credit limit, up to $10,960.

You cannot claim an adoption tax credit and exclude from income amounts for the same expenses. However, if your expenses exceed the limit of $10,960, you may be able to claim a credit for the expenses you could not exclude up to the credit limits.

If you received adoption benefits from your employer, figure the amount of benefits you may exclude from your income in Part III of Form 8839. You need to complete part III before you can figure the credit in part II.

Adoption tax credit Carryover to next tax year

If line 17 of Form 8839 is smaller than line 14, you may have an unused credit to carry forward to the next 5 years or until used, whichever comes first.