The Adoption Tax Credit [2011]


The 2011Adoption Tax Credit1


If you adopted a child in 2011 you may be eligible for an adoption tax credit of up to $13,360.




·    The 2011 adoption tax credit is an amount of up to $13,360 which is subtracted from your tax liability.


·    The tax credit is refundable, meaning if you owe no taxes for the credit to offset, the credit can be distributed to you in the form of a refund and spent as you see fit. 


·    The tax credit is per child, meaning you can claim the credit for each child you adopted.  For example, taxpayers who adopted two special needs children in 2011 could claim the credit for each child, bringing the total credit to $26,720.  Taxpayers who adopt three children could claim $40,080, etc.



·    Taxpayers can qualify for the credit if they adopted an eligible child (other than a stepchild) with special needs. 


o  An eligible child is one who is under 18 years old or any disabled person physically or

     mentally unable to take care of himself or herself.


o  A child has special needs if he/she is 1) a United States citizen or resident, 2) a state

     determines that the child cannot or should not be returned to his or her birth parents’ home,

     and 3) a state determines the child probably will not be adopted unless assistance (i.e.

     AAP) is provided.


IMPORTANT: Children who are adopted out of foster care and who receive adoption assistance or subsidy benefits, including Adoption Assistance Program (AAP) payments, are considered children with special needs.


·    Taxpayers can also qualify for the credit if they adopted an eligible child (other than a stepchild) and paid qualifying adoption related expenses (including reasonable and necessary expenses directly related to, and for the principal purpose of, the legal adoption of an eligible child, such as adoption fees, court costs, attorney fees, and traveling expenses).



·    Taxpayers who adopt a special needs child are entitled to claim the full amount of the adoption credit without regard to any adoption expenses. 


·    Taxpayers who adopted an eligible child and who had qualifying expenses can be credited for the amount that was spent on qualifying adoption expenses up to the maximum allowed amount of the credit.  The credit is not available for expenses that have already been reimbursed to the taxpayer.


·    Depending on a taxpayer’s modified adjusted gross income (modified AGI), the credit may be reduced or eliminated.2 



·    Taxpayers who adopt a child with special needs can claim the credit in the year the adoption became final.  They will need to include a copy of their adoption order and a copy of the state determination of special needs (i.e., a copy of their AAP Agreement). 


·    For taxpayers claiming the credit based on qualifying adoption expenses, the year in which the credit can be taken will depend on when the expenses were incurred. 


·    To claim the credit, adopting parents fill out Form 8839 and attach it to their Form 1040 or Form 1040A. 


·    Generally, married couples must file a joint return in order to claim the adoption tax credit. 


·    Tax returns will need to be filed in paper form as opposed to electronically.



·    For more information, please contact a tax attorney, tax preparer, accountant, or the IRS (1-800-829-1040;; 


·    Taxpayers can meet with an IRS representative in person at their local Taxpayer Assistance Center (TAC) and may be eligible for free tax preparation assistance if they qualify for the Earned Income Tax Credit or their income is $50,000.00 or less.  The number for the Los Angeles TAC is (213) 576-3009.  For a list of TACs throughout the United States see or call the IRS at 1-800-829-1040. 

1 This flyer was last updated March 2012. 

2 Taxpayers with a modified AGI of $185,210—225,210 will be phased out of the tax credit


The information contained in this handout on the Adoption Tax Credit is for general information purposes only and is not legal advice.  Readers should consult a tax attorney, accountant, tax preparer or other tax expert regarding their particular situation and tax return.  This handout is not intended to be used, and may not be used, for the purpose of avoiding IRS penalties.