Child Adoption Tax Credit

I have 5 grandchildren and one great grandchild.  Two of my grandchildren are from adoption.  They are VERY special to me.  One of them likes to whoop me at chess, both can out run me.  They are successful entrepreneurs…they raise ducks and sell the duck eggs.  They’ve also been know to run an occasional lemonade stand.

My daughter and son-in-law are some of my heroes.  They chose to rescue these two wonderful girls from an abusive family situation very early in their lives.  The birth parents had some serious drug issues.

This brings me to the point of today’s article.  A tax credit for adopting children.  It’s called the “Adoption Credit.”  You can take a credit against your taxes up to $16,810 of qualified expenses per eligible child in 2024.  Qualified expenses include adoption fees, legal expenses, court costs, travel, meals and other expenses directly related to the legal adoption of a child.  Bonus:  The full credit is available for special-needs children even if it costs less.

But wait, there’s an income limit on who can take the credit.  Typical Congress, they don’t want to give “rich folks” an inceptive to adopt children.  If your modified adjusted gross income (MAGI) exceeds $252,150, the credit starts to phase out.  When your MAGI reaches $292,150, no credit.  (Don’t get me started on MAGI.  See a prior article on the Congressional stupidity of that term and how it changes from one situation to the next.)

When can you take the credit? 

For adoptions of children who are citizens of the US or residents of the US and it’s territories, all expenses are added up (over multiple years) and taken in the tax year the adoption is final, even if the adoption ends up being unsuccessful.  If you end up having additional adoption related expenses in a later year following the final adoption, those qualify for the adoption credit in the year you pay them.  Remember though, once you take the total credits adding up to the maximum of $16,810 per child, you’re done.

For adoptions of all other children (foreign), you can take the credit only when the adoption is final.  There is no credit allowed for unsuccessful adoptions of foreign children.

There are MANY children needing a real home.  Perhaps you are one of those special heroes as well? 

Have you heard?  Psalm 127:3a says, “Behold, children are a heritage from Yahweh…”  then Psalm 127:5 says, “Blessed is the man who fills his quiver with them!  He shall not be put to shame when he speaks with his enemies in the gate.”