To qualify for the adoption tax credit score, you have to undertake a toddler underneath the age of 18. It does not matter, nevertheless, whether or not you undertake that youngster through the foster care system or a non-public company, and each home and worldwide adoptions depend. Nevertheless, adopting a stepchild does not render you eligible for the credit score.
How a lot is the adoption tax credit score price?
In 2020, the adoption tax credit score may very well be price as much as $14,300. In 2021, its worth will increase to $14,440. To assert the utmost credit score, nevertheless, it’s essential to rack up that a lot in eligible bills. Given the standard price of adoption, although, that is probably not a problem.
Are there revenue limits related to the adoption tax credit score?
Many well-liked tax credit begin to section out for greater earners, and the identical holds true for the adoption tax credit score. Nevertheless, the revenue thresholds for eligibility are fairly beneficiant. In 2020, the credit score begins to section out for filers with a modified adjusted gross revenue (MAGI) of $214,520, and the credit score is off limits for a MAGI of $254,520 or greater.
In 2021, these limits are rising barely. The credit score will begin to section out with a MAGI of $216,600 and might be off the desk for a MAGI of $256,660 or above.
Easy methods to declare the adoption tax credit score
Adoption generally is a multi-year course of, and for home adoptions, you are allowed to assert the adoption tax credit score for the tax 12 months during which bills are incurred. For instance, say you start the adoption course of in 2018, throughout which you spend $5,000, and also you finalize the method in 2019, spending one other $5,000. You may declare the primary $5,000 in your 2018 tax return after which declare the rest on the next 12 months’s tax return. For those who’re doing a global adoption, nevertheless, you may solely declare the credit score within the 12 months the adoption turns into ultimate. It is vital that you simply hold good information so what bills to assert.