2024 Federal Adoption Tax Credit: Who Can Claim It and How Much?

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Many people might not know that they could qualify for a credit if they are adopting a child. This federal adoption tax credit could be more than $16,000 per eligible child for 2024. The objective of the credit is to offset the high costs of adopting a child.

Federal adoption tax credit: who can claim it?

The U.S. tax code allows adoptive families to receive a tax benefit for all qualifying expenses incurred in pursuing an adoption. A taxpayer can apply this credit to “international, domestic, private and public foster care adoption,” according to the IRS.

To qualify for the federal adoption tax credit, you need to meet the following requirements:

  • You must have adopted a child (other than a stepchild) from foster care, a relative’s child, or internationally, or privately from the US (except your spouse’s child). If you are adopting a child from the U.S., you can also claim expenses for a failed or non-finalized adoption, but you need to wait a year after you incur the expenses, to claim them.
  • The child you are adopting must be under 18 years old or is physically or mentally unable to take care of him or herself.

Taxpayers need to fill out Form 8839 (Qualified Adoption Expenses) to find out how much credit they can claim. Even though the federal adoption tax credit is non-refundable, any unused credit can be carried forward for up to five years.

How much can you get?

Qualifying expenses include adoption fees, legal expenses, travel costs in connection with the adoption and other expenses directly related to the legal adoption of an eligible child.

Also, expenses that the state requires you to spend as a condition of your adoption, such as putting a fence around a pool, may qualify for the credit. If you are adopting a child with special needs, you may claim the full credit amount even if you haven’t incurred the full amount of expenses.

For 2024, the federal adoption tax credit is up to $16,810. The amount of credit usually increases each year, and the increase depends on the “cost of living” calculation. The maximum credit for 2023 was $15,950.

Also, the income threshold to qualify for the credit changes each year as they are also based on the cost of living. For 2024, the full credit is available to those with a modified adjusted gross income (MAGI) of $252,150 or less.

The credit amount is reduced for those with a MAGI of more than $252,150 but less than $292,150. Those with income more than $292,150 do not qualify for the 2024 federal adoption tax credit. The threshold income for 2023 was between $239,230 and $279,230.

Data from wearefamiliesrising.org suggests that families with adjusted gross incomes of less than $30,000 are unlikely to benefit from the credit as such families won’t have any federal tax liability. On the other hand, families with AGI of more than $100,000 are more likely to use most of the credit.