Adoption Tax Credits

(Please note that this information should not be considered legal advice or advice from a Certified Professional Accountant.)

The Hope for Children Act (Public Law 107-16) was passed on May 26, 2001 by both Houses of Congress as part of the Economic Growth and Tax Relief Reconciliation Act of 2001. On June 7, 2001 President Bush signed the legislation which went into effect on January 1, 2002.

This Adoption Tax credit increases the previous $5,000 adoption tax credit for “qualifying adoption expenses” to $10,000. It also increases the employer adoption assistance exclusion to $10,000. The Adoption Tax Credit allows families to take up to $10,000 of qualified expenses as a dollar for dollar tax credit, not a deduction.

These expenses may be taken in the year the adoption is finalized and are available for both domestic and international adoptions.

Download a pdf of The Hope for Children Act.

IRS Website on Adoption Credit — Basically "the horses mouth." Discusses the law and provides links to the appropriate publications and forms for parents and tax professionals. Also provides links for employers to obtain information on setting up an adoption assistance program and information on how to report this benefit.

State Subsidy for Adoption

If you live in one of the following states you might be able to qualify for $2,000.00 in financial assistance for your adoption. The list of the state is as follows; Alabama, Alaska, Hawaii, Idaho, Iowa, Kansas, Kentucky, Maryland, Mississippi, Missouri, Nebraska, Ohio, Oklahoma, Utah, Vermont. Go to this site for more details:
http://www.nacac.org/subsidyfactsheets/internationaladoption.html