A birth mother has chosen you for the amazing gift of a child for your family and your loving home for her child. Congratulations! Taxes may be the last thing you’re thinking about on such a momentous occasion, but adoption, taxes, and timing can be confusing.
Can you take a deduction for a newly adopted child this year?
Just as you can take a tax deduction and Child Tax credit for a child born into your biological family in the tax year during which they’re born, you can take credits and deductions for a child you adopt during the year. Broadly speaking, a dependent must live in your home for at least 50% of the year in order to qualify as a deduction. However, babies meet that standard as soon as they are born and older children qualify from the date of placement. If you expect your adoptive child to be born in December, you should still plan to file with him or her as a dependent.
If the adoption is not final by the end of the year, perhaps because of the official waiting period or court dates, you may still be able to claim your child as a dependent. Discuss this with your tax advisor.
When can you take adoption expense credits?
Expenses you incur in the course of your adoption journey are mostly tax deductible.
For domestic adoptions, you can claim the expenses in the year in which you spent the money. Foreign adoptions are different; the adoption must be complete before you can claim the credits for the expanses.
When you need specific tax advice, you should contact your tax advisor or accountant. When you need legal support through your adoption journey, you should contact Heimer Law.
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