What is the adoption tax credit?

The adoption tax credit is a federal tax credit available to individuals and families who adopt a child or children in the United States. This credit was established in 1996 under the Orphaned Child Tax Credit and was expanded in 1998 under the Adoption Tax Credit. In Pennsylvania, qualified adopters may receive up to $13,810 per eligible child as a tax credit in 2020. The Adoption Tax Credit is available to eligible individuals and families to help offset the costs associated with adoption, such as attorney fees, court costs, and travel expenses. This credit is available for both domestic and international adoptions. Taxpayers who adopt a child with special needs are also eligible for an additional credit. The Adoption Tax Credit is nonrefundable and is applied to the amount of taxes owed. For instance, if you owe $5,000 in taxes and have an Adoption Tax Credit of $5,000, you will owe nothing in taxes. However, if you owe $7,000 in taxes and have an Adoption Tax Credit of $5,000, you will still owe $2,000. Pennsylvania residents should consult with a tax professional to ensure they are eligible for the Adoption Tax Credit and to ensure any claims are completed properly.

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What is the adoption tax credit?

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