5 Things To Know About Adoption Tax Credit
Taxpayers who adopt a child may get approved for the adoption tax credit and paid out-of-pocket costs relating to the adoption. The amount of the tax credit you qualify for is directly related to just how much money you invested in adoption-related expenditures. If you adopt a child with special needs, however, you are entitled to claim the full amount of the adoption credit, even if your out-of-pocket expenses are much less than the tax credit amount.
While according to the law it is clear that the adoption tax credit is still readily available to for family members, there remains a good deal of complication bordering it. Below are aspects of the tax credit that adoptive parents must know:
1. Overview of the credit
The adoption tax credit is a nonrefundable credit. This means it can not lower a taxpayer’s tax burden below zero. Nevertheless, if there are unused tax credits, they can be carried over to next year. It is important to keep in mind that there is a five-year limit for adoptive moms and dads to completely make use of the credit.
People might have the ability to benefit from the adoption tax credit when adopting a child that is under the age of 18, has special demands or is incapable to look after themselves.
3. Maximum credit
The most that adoptive parents can receive for 2018 is up to $13,810 per child.
4. Income limits
This tax credit will certainly eliminate based on your modified adjusted gross income. When filing this year, the phase out range is in between $201,920 and also $241,920. If your modified adjusted gross income exceeds $241,920, you can not make use of the adoption tax credit.
5. Eligible expenses
There are a variety of costs that might be qualified for the credit. These consist of adoption costs, legal expenses as well as travel costs. It is very important to keep proper documentation of all adoption-related expenditures in case the Internal Revenue Service audits you.
While adopting a child brings enormous happiness to a family members’ life, the prices of navigating the complex adoption laws in Elizabeth, KY can make the procedure challenging for lots of famileis. Thankfully, the adoption tax credit can help ease those monetary problems for adoptive parents.
At the law firm of Clagett & Barnett, we serve prospective adoptive parents throughout the Elizabethtown and surrounding areas in all aspects of the adoption process. Do not hesitate to contact us