The Adoption Credit is available for the amount of out-of pocket
qualified adoption expenses, or to exclude employer-provided
adoption benefits from income. The maximum credit for 2011 is
$13,360. For adoptions finalized in 2010 or 2011, the credit is refundable, as is
unused credit carried forward from years before 2010, even though
the credit was nonrefundable in prior years. Starting with
2010, the credit can no longer be carried forward (see Credit
Limitations below for more information).
Qualified adoption expenses include expenses that are reasonable
and necessary in order to adopt the eligible child:
For the adoption of a special-needs child, the maximum credit is
available, regardless of actual qualifying expenses.
Most taxpayers claim the credit in the year their adoption is
final. There are some allowable exceptions and requirements:
If your employer provides an adoption assistance program you may
be able to exclude from income the expenses paid on your
The expenses must be paid directly to you or a third party for
qualified adoption expenses. Employer-provided adoption benefits
may reduce your salary and are generally reported in Box 12 of your
The amount of the Adoption Credit begins to phase out when your
2011 modified adjusted gross income (MAGI) reaches $185,210, and is
eliminated at $225,210. The same limits apply to all filers.
To take the credit or exclusion, complete Form 8839 and attach the form to your
Form 1040 or Form 1040A.