If you adopted, or attempted to adopt, an eligible child (including a special needs or foreign child), you may qualify for a tax credit to offset eligible adoption-related expenses.
To claim this credit, the adoption typically must have been finalized during 2024. However, if you incurred qualified expenses in 2024 for an adoption that has not yet been finalized, you may still be eligible to claim the credit for those expenses.
How to Enter Information in the Program
To complete Form 8839 (Qualified Adoption Expenses) within the program, follow these steps:
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Navigate to the correct section:
- Go to Federal > Deductions (select “My Forms” and click Continue) > Credits > Adoption Credit (Form 8839).
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Enter child and expense details:
- Provide the adopted child’s name, date of birth, and Social Security Number (SSN) or Adoption Taxpayer Identification Number (ATIN).
- Input all qualified adoption expenses paid in prior years and the current year. If the adoption was finalized in 2024 for a child with special needs, enter the maximum exclusion amount allowed for the current year.
- Report any employer-provided adoption benefits received in prior years or the current year. Mark the appropriate box if benefits were received previously.
Adoption Tax Credit Amount and Refundability
For the 2024 tax year, the Adoption Tax Credit is worth up to $16,810 per eligible child for qualified adoption expenses. These expenses may include court and attorney fees, travel costs (including food and lodging), and other costs directly related to the adoption.
Note that this credit is non-refundable, meaning it can reduce your tax liability to zero, but any unused portion can be carried forward for up to five years.
The credit amount you may claim depends on your actual adoption costs and your modified adjusted gross income (MAGI):
- If your qualified expenses meet or exceed $16,810, you can claim the full credit.
- The credit begins to phase out if your MAGI exceeds $252,150 and is eliminated entirely once your MAGI reaches $292,150.
Entering Qualified Adoption Expenses Carryforward
To input your carryforward amount, locate the Adoption Credit Carryforward Worksheet from your prior year’s return (found in the PDF). This worksheet, labeled “Adoption Credit Carryforward Worksheet—Line 16,” will provide the carryforward amount you need to manually enter into the program.
Steps for entering the carryforward:
- After entering the adopted child’s information, click Continue.
- On the next page, you’ll see a summary of the child’s details and expenses entered.
- Click Continue again to access the page where you can input your Qualified Adoption Expense Carryforward.
- Enter amounts from lines 12, 14, 16, 18, or 20 of your 2023 worksheet as directed.
Special Considerations for Children with Special Needs
Children with “special needs” for adoption tax purposes may differ from other definitions of special needs. For adoption purposes, a child with a disability does not necessarily qualify as having “special needs.”
A child is typically considered to have special needs for adoption if:
- They are a U.S. citizen at the start of the adoption process.
- A state child welfare agency has determined that returning to the biological parents’ home is not safe.
- The agency has also determined the child is unlikely to be adopted without assistance provided to the adoptive family.
If your employer offers a qualified adoption assistance program and you adopt a child deemed “difficult to place” by the state, you may qualify for the tax credit even if you didn’t pay any qualified adoption expenses.