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The adoption tax credit is per child, thus the credit doubles when adopting two children in the same year. [9] It is also important to note that this is a "credit," not a mere "deduction." [10] A tax credit is a dollar for dollar reduction of federal tax, not a reduction of taxable income, such as with a mortgage payment.
The Adoption tax credit has provided tax credits continuously since 1997. Special needs adoptions qualify for the maximum tax credit even if no qualified adoption expenses are incurred. Section 36C of the United States Internal Revenue code offers a credit for "qualified adoption expenses" paid or incurred by individual taxpayers. [2]
The maximum adoption credit, which is available to families who adopt a child with special needs, is $17,280 in 2025, up from $16,810 in 2024. Estate tax exclusions
The Adoption Assistance and Child Welfare Act of 1980 (AACWA) was enacted by the US Government on June 17, 1980. Its purpose is to establish a program of adoption assistance; strengthen the program of foster care assistance for needy and dependent children; and improve the child welfare, social services, and aid to families with dependent children programs.
Regardless of where you adopt your child from, you may also be eligible to claim the federal Adoption Tax Credit. This credit is issued to you as a refund and, in 2023, you could get up to $15,950.
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Adopters can claim most expenses through the adoption tax credit. For foster system adoptions, the adoption tax credit may cover the entire cost of adoption. Foster children may also qualify for monthly government stipends, Medicaid health insurance, and even college tuition. [38]
For example, one of the most common tax credits is the Child Tax Credit. Tax credits encourage people to spend money by giving them credit toward that expense. A Comprehensive Guide to 2020 Tax ...