<topic sku="core" tNum="289586" author="sallyh" xmlns="x-schema:hhTopicSchema.xml"><index><title>Learn about the adoption credit</title><category>tax</category><klink type="prcdr">Tell me about the adoption credit</klink></index>
<content>
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<p>The adoption credit is a dollar-for-dollar reimbursement for qualifying adoption expenses. For 2001, you may qualify for a credit of up to $5,000 per adopted child, or up to $6,000 if the adopted child is determined by the state to have special needs. The credit is reduced if your modified adjusted gross income (AGI) is more than $75,000, and it is completely phased out if your modified AGI is more than $115,000. For 2002, the maximum credit for any child is $10,000, and the maximum credit is phased out between income limits of $150,000 and $190,000.</p>
<p>The child you adopt must be under age 18 or be physically or mentally incapable of caring for himself or herself. </p>
<p>A "special needs child," for purposes of the $6,000 limit, is a child for whom it has been determined by a state that he or she probably will not be adopted unless assistance is provided. Factors that the state considers include the child's age, ethnic background, whether the child is a member of a minority or sibling group, medical condition, and mental, physical, or emotional handicaps. The child must also be a U.S. citizen or resident.</p>
<p>The following expenses qualify for the purposes of the adoption credit:</p>
<ul>
<li>Court costs and legal fees</li>
<li>Traveling expenses away from home</li>
<li>Other expenses directly related to the legal adoption of a child under age 18 or someone who is physically or mentally unable to care for himself or herself</li>
</ul>
<p>Expenses for surrogate parenting arrangements, expenses for adopting your spouse's child, or expenses reimbursed or paid by someone else do not qualify.</p>
<p>You generally cannot take the adoption credit if you use the Married Filing Separately filing status.</p>
<p>You can take an adoption credit up to a limit of your regular tax liability for the year less the child care credit, the credit for elderly or disabled, and the mortgage interest credit. If you cannot take all of your adoption credit because of the limitation, you can carry the credit forward for up to five years.</p>
<p> For more information, see IRS instructions for Form 8839, Qualified Adoption Expenses, on the <alink type="xtnl" href="http://www.irs.gov">IRS Web site</alink>.</p>
