A Closer Look At The Tax Credit For Adoptive Parents
Most people in the country are aware of the fact that having child dependents in the home means that they can qualify for a significant tax break. But it’s also important to note that those who adopted a child or even those who tried to adopt a child could also claim a tax credit. The adoption credit offers these individuals the chance to get a big break on their taxes, and it’s well worth learning more about.
Luckily, it’s not that difficult to understand the basics behind it, either. Here are the main things that you’ll need to understand about the adoption credit.
• Only children who are under the age of 18 can be claimed on these tax credits. The only exception is if an individual is older than 18 but are physically or mentally unable to take care of themselves and thus still dependent entirely on their adoptive parents.
• You won’t be able to receive a refund due to the adoption credit. Instead, it is only used to reduce a taxpayer’s tax liability to zero. If your credit amount is more than the total amount of taxes owed, you won’t receive additional funds on a refund due to the adoption credit.
• However, the amount of unused tax credit can actually be carried over to the next year. If your adoption credit drops your owed taxes to zero and still has more left in the balance, that balance can be applied to next year’s taxes instead of just vanishing forever.
• You can claim adoption expenses as long as they’re directly related to the adoption process of the child. This can include things like travel fees, attorney fees, court costs, the actual adoption fees, and more.
• If your employer helped pay for the adoption through an adoption assistance program, you can claim an exclusion in the at amount on your taxes.
• Tax credits can be claimed whether you adopt a child domestically or from a foreign country. The rules for what expenses qualify may vary to some degree, but the basic principles will be the same.
• You may be able to claim tax credits as well as the exclusion. But, you can’t do so for the same expenses.
There’s no doubt that adoption can have a tremendously positive impact on the lives of those involved, bringing love and happiness to parents and children. But don’t’ forget that they could also help your taxes in some way as well. Our tax pros can make sure you get the right tax deductions this year on your taxes. Contact Sherbetjian Premium Tax Services today to get the help you deserve.