According to the Alabama Department of Revenue, "only reasonable medical and legal expenses that were paid or incurred during the adoption process of a minor" can be deducted as an adjustment to income. These expenses can only be deducted if they were paid during the tax year for which you are filing. If you were a part year resident of Alabama, you may only deduct the expenses that were paid while you were a resident of the state.
The resident credit can be up to $1,000.
- Medical and hospital expenses of the child and the child's biological mother (which were incurred for the child's birth).
- Medical expenses incurred following the birth (for the child).
Adoption agency fees are NOT deductible