Phoenix Indian Community - PhoenixIndian.com
| | |
 


 

10 Facts about the Adoption Tax Credit

Money
Contributed by : Mukesh Makker

Share With Your Friends

Add To My Favorite
If you adopt a child in 2019, you may qualify for a tax credit, and if your employer helped pay for the costs of an adoption, you may be able to exclude some of your income from tax. Here are ten facts you should know about the Adoption Tax Credit.

1. Credit or Exclusion. The credit is nonrefundable. This means that the credit may reduce your tax to zero. If the credit is more than your tax, you can't get any additional amount as a refund. If your employer helped pay for the adoption through a written qualified adoption assistance program, you may qualify to exclude that amount from tax.

2. Maximum Benefit. The maximum adoption tax credit and exclusion for 2019 is $14,080 per child.

3. Credit Carryover. If your credit is more than your tax, you can carry any unused credit forward. This means that if you have an unused credit in 2019, you can use it to reduce your taxes for 2020. You can do this for up to five years, or until you fully use the credit, whichever comes first.

4. Eligible Child. An eligible child is under age 18. This rule does not apply to persons who are physically or mentally unable to care for themselves.

5. Qualified Expenses. Adoption expenses must be directly related to the adoption of the child and be reasonable and necessary. Types of expenses that can qualify include adoption fees, court costs, attorney fees, and travel.

6. Domestic Adoptions. For domestic adoptions (adoption of a U.S. child), qualified adoption expenses paid before the year the adoption becomes final are allowable as a credit for the tax year following the year of payment even if the adoption is never finalized.

7. Foreign Adoptions. For foreign adoptions (adoption of an eligible child who is not yet a citizen or resident of the U.S.), qualified adoption expenses paid before and during the year are allowable as a credit for the year when it becomes final.

8. Special Needs Child. If you adopted an eligible U.S. child with special needs and the adoption is final, a special rule applies. You may be able to take the tax credit even if you didn't pay any qualified adoption expenses.

9. No Double Benefit. Depending on the adoption's cost, you may be able to claim both the tax credit and the exclusion. However, you can't claim both a credit and exclusion for the same expenses. This rule prevents you from claiming both tax benefits for the same expense.

10. Income Limits. The credit and exclusion are subject to income limitations. The limits may reduce or eliminate the amount you can claim depending on the amount of your income.

Please contact the office if you have any questions or would like additional information about this tax credit.


About Author
Mr. Maker is a certified Public Accountant and serving the South Asian community since 1993.


Website: https://taxmaker.com/archive.php?archive=072019#5

 

Disclaimer: Please use this channel at your own discretion. These articles are contributed by our users. We are not responsible or liable for any problems related to the utilization of information of these articles.

 

View All Contributions

My Business:
Accounting and Tax Professionals, Inc
Bellevue

Post an Article
Notify Me of New Articles

Become A Featured Contributor
Add Your Blog | Add Recipe | Add Article

More Article by Mukesh Makker

View All Articles

Featured Contributors


Christine Dunbar

Shruti Sadolkar

Ananya Kiran
Ananya Kiran

Rima Arora

Praveen Nair

Darshan Goswami
Darshan Goswami

Vivek Wadhwa

Dilip Saraf

Anu Peshawaria
Anu Peshawaria

Latest Articles

SuperGirl Teaser launched by Choreographer Sandip Soparrkar by Staff
"Shirdi Saibaba" fame actor Aushim Khetrapal returns to acting after 18 years in "Chal Jeet Le Jahan" by Staff
War team recreates Indian Airforce Plane Gajraj by Staff
First Look Poster out "SuperGirl" Monika Chaudhary and Shaila Tike by Staff
Premier of I Killed Her Short film based on Domestic Violence by Staff
View All Articles