Many couples who are unable to have children would like to adopt, but are discouraged by the expenses involved. Common misconceptions about adoption are that the costs are always exorbitant.
Some ways of adopting are less expensive than others. Government statistics show that costs range generally from between $5,000 to $25,000 for child adoption. However, if you adopt a child in foster care and are working with a public social services agency, sometimes there is no cost at all. In addition, some public agencies provide adoption subsidies. Adopting a child is usually less expensive than adopting an infant.
More good news is there is an adoption tax credit that can make adoption more affordable and offset expenses. When Congress passed the American Taxpayer Relief Act of 2012, the act established an Adoption Tax Credit. This tax credit has now become a permanent part of the IRS code.
Adoption typically involves the following expenses, which are qualified expenses for the tax credit:
- Reasonable and necessary adoption fees
- Court costs and attorney fees
- Traveling expenses
- Other expenses directly related to legal adoption
The maximum adoption tax credit for 2015 is $13,400. Each year the tax credit amount is increased or decreased based on inflation (note: inflation usually increases the tax credit). Your tax credit counts for each child if you adopt twins or triplets.
As long as your 2014 modified adjusted gross income was less than $197,880, your maximum adoption tax credit remains at $13,400 and is not reduced or eliminated.
While adoption is exciting, you are bound to have legal questions and should consult with an experienced family law attorney. Our attorneys at C.E. Borman & Associates are here to guide you every step of the way.