There is amazing news for prospective adoptive parents For 2023, the federal adoption tax credit is worth $15,950.
Worth $15,950 For Adoption Tax Credit 2023 To Claim – Here’s You Need To Know (PHOTO: TaxSlayer)
The Adoption Tax Credit
The amazing thing about this tax credit is that it is not a deduction that reduces your income for purposes of determining your tax liability. Instead, it is a tax refund that is based on a dollar-for-dollar deduction of your whole tax liability.
The adoption tax credit (ATC) this year is $15,950 to offset your adoption costs. Moreover, the amount of the credit will slightly increase every year because it is based upon a “cost of living” calculation. The numbers that define the lower and upper limits of income eligibility also will fluctuate since they are based on the current cost of living.
To take the full benefit of the adoption tax credit, we recommend that you consult with a financial advisor who will help you determine the extent of the tax credit available to you. Nonetheless, here are our answers to the most common questions about the adoption tax credit and how it works.
Qualified expenses
Qualified adoption tax credit payments contain such things as:
- Adoption payments
- Court costs and legal payments
- Adoption-related travel expenses like food and lodging
- Other payments directly related to the legal adoption of an eligible child
Expenses may be deductible even if the taxpayer pays them before an eligible child is recognized. Qualified adoption expenses do not have expenses that a taxpayer pays to adopt their spouse’s kid. They may, but, it includes adoption expenses paid by a registered domestic partner if that partner resides in a state that allows a same-sex second parent or co-parent to adopt their partner’s child.
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