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Adoption Tax Credit

  Sanjiv Gupta CPA  Published 
Adoption Tax Credit

While adopting a child is a noble and loving gesture, it also comes at a hefty price. Many parents who either have or are looking to adopt a child will spend up to $30,000 before all paperwork is finalized. This number varies greatly depending on where the child is being adopted from and where the parents live of course. For example, A Pennsylvania, U.S. mother adopting a child from a bordering state will not pay nearly as much as if she was adopting a child from India or Africa.

Why is there a Tax Credit for Adoption?

The adoption tax credit was established in the early 2000s for several reasons. Children were being forced into the adoption system more regularly than in previous years. In order to both increase public awareness on the adoption system and encourage parents to adopt, a tax credit was made. This tax credit is explained in detail in the following paragraph, but it is essentially a portion of your expenses made during the adoption process.

Even though the adoption of a child is expensive, you will receive a portion of your funds back and you will help take a child out of the system and give them a happier, healthier life. Special needs children are the main targets of the tax credit because, unfortunately, they are the least likely to be adopted.  Taking a chance and adopting a child is great for parents emotionally and now financially as well.

The Adoption Tax Credit Overview

Relief is available for parents looking to adopt a child. The adoption tax credit offers parents of adopted children a money-back wager each year, which will save them money and reduce their tax expenses. According to the IRS Form 8839 – Qualified Adoption Expense – parents can receive up to $13, 190 per year per adopted child.

However, these adopted children need to pass a single requirement in order to be considered eligible for a tax credit.

  • The child must be under the age of 18 and/or mentally/physically unable to take care of themselves.

It is important to remember that this tax credit can only be granted towards fees applying directly to the adoption process. This means that fees relating to the court system, hiring an attorney, traveling expenses, home inspections, etc. can be reimbursed. Fees relating to the child such as food, healthcare, school, etc. cannot be reimbursed under the adoption tax credit.

Adoption Tax Credit and Special Needs Adoption

 If the parent(s) is adopting a child who qualifies as special needs (see requirements below), they are automatically allowed to receive the max amount of reimbursement. This applies regardless of the amount of money spent during the adoption.

Special Needs Requirements

  • It is unlikely that the child would have been adopted if additional help weren’t available.
  • The child can’t or shouldn’t be returned to the biological parent’s home.
  • The child is a citizen or resident of the United States (if international, this rule bends depending on the location of adoption)

 Applying for the Adoption Tax Credit

 Whereas most tax credit forms can be submitted online, the adoption tax credit is not. This tax credit is applied completely on paper. There are several steps a parent needs to complete and several forms that need to be filled out in order to apply and receive their adoption tax credit.

  •  – IRS Form 8839 must be filled out and sent to the IRS prior to any other steps.
  • A paper copy of the adoption certificate signed by the specified judge is needed.
  • If your child is special needs, a certificate signed by the state that specifically states the child is special needs and that he/she meets all of the qualifications must be submitted to the IRS.

There are several other paper documents that need to be signed, including the rights of the child form, a few adoption agency forms stating your responsibilities, house inspection forms, etc.

Expect a Delay

Due to the Adoption Tax Credit application being an all-paper process, the submission and acceptance of the tax credit can take a while to go through. Expect at least 4 weeks, likely more, before you hear back about confirmation from the IRS.

Sub note

 If a parent tries to adopt a child and for some reason is not able to, he/she can still apply for the Adoption Tax Credit in order to get a reimbursement on their expenses up to the point of termination of the adoption. There are no specific qualifications that need to be met in this case, other than that the adoption cannot be canceled due to a failed home inspection or declaration of unfit parents.


 Adopting a child is a blessing for both the parents and the child. With expenses being high and the adoption process being exhausting, the government has created a way to ease your stress through the Adoption Tax Credit. For more information, visit the IRS website or your local adoption agency today.