Adoption, Donation, and Your Taxes

Adoption, Donation, and Your Taxes

Did you know?

Of the 400,000 American children living in foster care, over 100,000 are waiting to be adopted. Given the legal, medical, and court costs—not to mention airfare, food, and accommodations while traveling to adoption-related appointments—it’s no wonder families are hesitant to adopt.

But there are many resources, and ways to help.

In recognition of National Adoption Awareness Month, we’ve done some research. Whether you want to adopt or donate, we’ve assembled some handy resources to answer some of your most pressing questions.

  • Can I afford to adopt a child?

While it’s true that adoptions can be expensive, the state and federal government have programs in place to help offset the costs, like a tax credit for qualified adoption expenses associated with adopting a child and benefits from your employer.

  • What are adoption expenses?

To see what qualifies as an adoption expense, take a look at IRS 2017 Instructions for Form 8839. Examples of adoption expenses include court costs, travel, and other fees directly related to the adoption.

  • Am I eligible to receive adoption credit?

You can receive up to $13,570 per eligible child, depending on your income and other factors, such as the tax year for which you claim the credit.

  • What if my child has special needs?

Special rules apply for children with special needs. Keep in mind, though, for adoption-expense purposes only, whether a child has special needs is determined by the state.

If you adopt a child with special needs, even if your adoption-related expenses are not “qualified,” you might be eligible to receive the tax credit.

  • What additional assistance can I get?

Employer adoption assistance programs are becoming more and more popular. If your employer is adoption-friendly, you could get even more help in the form of benefits, additional payments, or reimbursements to offset adoption-related expenses.

Your employer will add your adoption benefits to Form W-2, but you’ll need to complete Part III of Form 8839 and include the form with your return.

The IRS offers an Interactive Tax Assistant—a quick and easy way to determine if you can claim a tax credit or exclude employer-related adoption benefits. Your answers to just a few questions can help you budget for an adoption. It takes about 5 minutes to complete.

  • How can I claim my adoption credit or exclusion?

Complete Form 8839.

  • I want to donate to a charitable organization instead.

Not everyone is able to adopt a child, but supporting organizations that raise money for adoptive families is another way to help. To assist a family with their adoption-related expenses, donate to an IRS approved 501(c)(3) organization. The IRS labels such organizations as “charitable.” If an organization falls into the 501(c)(3) category, your donation is probably tax-deductible.

Resources:

https://www.acf.hhs.gov/sites/default/files/cb/afcarsreport23.pdf

https://www.irs.gov/pub/irs-pdf/i8839.pdf

https://www.irs.gov/pub/irs-pdf/f8839.pdf

https://www.irs.gov/forms-pubs-search?search=adoption&=Search

https://www.irs.gov/taxtopics/tc607

https://www.irs.gov/help/ita/am-i-eligible-to-claim-a-credit-for-adopting-a-child-or-to-exclude-employer-provided-adoption-benefits-from-my-employer