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Adoption Tax Credits

Update on the Adoption Tax Credit

The federal adoption tax credit, originally set to expire on December 31, 2012, became permanent on January 2, 2013.  Now we are pleased to share even more good news that has been announced by the IRS this week. If you or someone you know is currently pursuing an adoption or considering adoption you’ll want to take note of the following highlights of the adoption tax credit for 2013:
  • The maximum dollar limit for the credit in 2013 is $12,970 (previously $12,650)
  • The range for reduced credit or exclusion is $194,580 – $234,580 (previously $189,710 – $229,710)
  • People who adopt children with special needs can claim the maximum credit regardless of their expenses (unchanged)
  • The adoption credit is not refundable for 2012 and beyond so only those individuals with tax liability will benefit (unchanged)
  • The adoption credit carry forward, beginning 2013, is indefinite (previously limited to 5 years)
For adoptions in 2012 and prior years, accurate details about the credit can be found in the recently and well-enhanced Tax Topic 607 at http://www.irs.gov/taxtopics/tc607.html.
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