Adoption and Other Dependents Credits Available

The Adoption Credit Can
Benefit Parents Who Adopt

If you adopted or started the adoption process during 2019, you should review the rules around the adoption credit. While the amount of the credit increases for qualified taxpayers, the rules remain the same.

Here are some facts to help you understand the credit and if you can claim it when filing your taxes:

  • The maximum adoption credit you can claim on your 2019 tax return is $14,080 per eligible child.
  • There are income limits that could affect the amount of the credit.
  • You should complete Form 8839, Qualified Adoption Expenses. Use this form to figure how much credit you can claim on your tax return.
  • An eligible child must be younger than 18. If the adopted person is older, they must be unable to physically take care of themselves.
  • This credit is non-refundable. This means the amount of the credit is limited to your taxes due for 2019. Any credit leftover from your owed 2019 taxes can be carried forward for up to five years.
  • Qualified expenses include:
    • Reasonable and necessary adoption fees.
    • Court costs and legal fees.
    • Adoption related travel expenses like meals and lodging.
    • Other expenses directly related to the legal adoption of an eligible child.
  • In some cases, a registered domestic partner may pay the adoption expenses. If you live in a state that allows a same-sex second parent or co-parent to adopt their partner’s child, these may also be considered qualified expenses.
  • Expenses may also qualify even if you pay them before an eligible child is identified. For example, some future adoptive parents pay for a home study at the beginning of the adoption process. These parents can claim the fees as qualified adoption expenses.
  • Qualified adoption expenses don’t include costs you paid to adopt your spouse’s child.

Credit for Other Dependents

If you have dependents who do not qualify for the Child Tax Credit, you may be able to claim the Credit for Other Dependents. The maximum credit amount is $500 for each dependent who meets certain conditions. These conditions include:

  • Dependents who are age 17 or older.
  • Dependents who have individual taxpayer identification numbers.
  • Dependent parents or other qualifying relatives supported by the taxpayer.
  • Dependents living with the taxpayer who aren’t related to the taxpayer.

The credit begins to phase out if your income is more than $200,000. For married couples filing a joint tax return, this phaseout begins at $400,000.

You Can Claim This Credit If:

  • You claim the person as a dependent on your return.
  • You cannot use the dependent to claim the Child Tax Credit or Additional Child Tax Credit.
  • The dependent is a U.S. citizen, national, or resident alien.

The Credit for Other Dependents can be claimed in addition to the Child and Dependent Care Credit and the Earned Income Credit.

Use the worksheet in Publication 972, Child Tax Credit and Credit for Other Dependents. This worksheet will help you determine if you can claim the Credit for Other Dependents.

Contact your local tax professional if you need assistance with Qualified Adoption Expenses or Credit for Other Dependents.

Bayshore CPA’s, P.A. are your local Certified Public Accountants

and Tax Resolution Specialists conveniently located

in Mooresville, North Carolina

Image Adoption: ID 18728807 © Lucian  Milasan | Dreamstime.com
Image Other Dependents: Photo 33222713 © Lisa F. Young – Dreamstime.com