Bring home a new baby in 2011? Congratulations! Collect your income tax refund.
We’re talking about collecting a tax credit for an adopted child. You’ll earn a tax credit whether you adopt domestically or internationally, but the process is different.
Domestic adoptions allow prospective parents to claim qualifying adoption expenses during the second year of the process, for expenses incurred during the first year. In the third year of the process parents claim expenses for both the second and third years, usually as they complete the adoption process. Adoptees may claim up to $12,150 in qualifying expenses per year. International adoptees claim the expenses the year the adoption is finalized, up to $12,150 in qualifying expenses, not incrementally during the process.
Your employer may also offer an adoption assistance program, up to $12,150, that may be excluded from your gross income. You can’t, obviously, claim the same expenses twice—as an exclusion and a credit.
Take a look at some qualifying expenses and make sure to discuss your eligibility and filing with your tax professional.