Adoption expenses

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Are adoption expenses tax deductible? Note that in this case the adoption has not been finalized and the expenses so far have been working with adoption agency so their fees.

1. My question is what part of the expenses will be tax deductible?

2. Given adoption process could take years, when can the eligible expenses be deductible - only after finalizing adoption, or could they be claimed as we go?

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Best Answer

  • PhillipB
    PhillipB FreeTaxUSA Team
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    If you missed claiming expenses paid in 2021 on the 2022 return, you would amend the 2022 return. If the expenses were paid in 2022, the expenses will be claimed on the 2023 return when you file in the coming months.

    Let me know if there are any other questions.

Answers

  • JMSSGV
    JMSSGV Member Level 5
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  • PhillipB
    PhillipB FreeTaxUSA Team
    edited December 2023
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    Hello, and thanks for asking your question.

    Adoption expenses are eligible for a tax credit on your Federal return (and may be deductible on some state returns as well).

    You can include any of the following expenses (this is included in the link from above):

    • Reasonable and necessary adoption fees,
    • Court costs and attorney fees,
    • Traveling expenses (including amounts spent for meals and lodging while away from home), and
    • Other expenses that are directly related to and for the principal purpose of the legal adoption of an eligible child.

    The timing of taking the credit depends on whether the adoption is domestic or foreign.

    • For domestic adoptions, the expenses can be use for the credit in the tax year following the year of payment and this is true even if the adoption is never finalized. For example, you pay expenses in 2023. You can claim the credit on the 2024 return.
    • For foreign adoptions, the credit is available in the year the adoption is finalized. You have foreign adoption expenses from 2015-2023 and finalize the adoption in 2023 - you can claim the credit for all of the 2015-2023 expenses on the 2023 return.

    Let us know if you have any other questions.

  • ideazinfinite
    ideazinfinite Member Newcomer
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    Thanks for the answer. In case of domestic, if I missed claiming some 2022 expenses in last year's return, could I claim them in 2023's return or should I have to amend 2022 return?