Adoption Tax Credit 2024
Funding Your Adoption Journey
The federal adoption tax credit and Indiana adoption tax credit are powerful resources that can make the adoption process more affordable.
Given the costs associated with adoption—including agency fees, legal expenses and birth mom expenses—the adoption tax credit helps offset a significant portion of these expenses by reducing your tax liability.
To learn more about your adoption financing options, schedule a free consultation with an adoption coordinator today.
What is the Federal Adoption Tax Credit?
The federal adoption tax credit is designed to reduce the financial burden of adoption by providing a tax benefit for certain qualified expenses. This credit can be used toward expenses like legal fees, court costs, adoption agency fees and other costs directly associated with adopting a child.
The amount of the credit varies each year. If you’re adopting in 2024, check the IRS website for the current tax year’s credit amount, as these numbers fluctuate annually.
How Does the Adoption Tax Credit Work?
The adoption tax credit is non-refundable, which means it can reduce your federal tax liability but cannot lead to a refund. If the credit amount is greater than your tax liability, you can carry forward the unused portion to future tax years (up to five years).
For example, if your tax liability is less than the credit amount, you can claim the remaining amount in subsequent years, helping to offset future tax obligations.
Who Qualifies for the Adoption Tax Credit?
To qualify for the adoption tax credit, you must meet certain requirements:
How to Claim the Adoption Tax Credit [Federal Taxes]
Claiming the adoption tax credit involves filling out IRS Form 8839. You’ll need to include detailed documentation of your qualified expenses, so keep accurate records throughout the adoption process. Consulting a tax professional can help ensure all required information is included.
If your adoption is not finalized, you may claim expenses under specific guidelines, particularly if the adoption occurs over multiple years. For those who experienced an adoption disruption, the credit can still apply to qualified expenses, even though the adoption didn’t complete.
Indiana Adoption Tax Credit [State Taxes]
In addition to the federal adoption tax credit, there’s also an Indiana adoption tax credit for eligible adoptive parents, providing another layer of financial assistance for adoption. This state-level credit helps offset adoption-related expenses and can be a valuable addition to the federal benefit.
Each state has its own guidelines, so consult the Indiana Department of Revenue for the most up-to-date information on this tax credit. Indiana families may also find financial help for adoption through state resources or programs designed to support adoptive parents.
Additional Resources
In addition to federal and state tax credits, adoptive parents in Indiana may qualify for other financial assistance for adopting a child:
These options, along with the adoption tax credit, can offer valuable financial help to adoptive parents and make the adoption process more affordable.
The adoption tax credit—both federal and state—offers meaningful financial help for adoptive parents by easing some of the financial challenges of adopting a child. With careful planning and knowledge of the credit’s eligibility requirements, you can maximize the available support.
Ready to explore your financial options in adoption? Schedule a free consultation with an adoption coordinator now.
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