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You Make the Call - March 13, 2025

Published:
By: NATP Staff

Question: Jim and Sarah are married and filing a joint tax return in 2024. Their modified adjusted gross income (MAGI) was $237,000. The couple finalized the adoption of a child with special needs in 2024 and have qualified adoption expenses (QAEs) of $10,000. Is their adoption credit limited to $10,000 in 2024?

Answer: No, Jim and Sarah can take the maximum adoption credit of $16,810 in 2024 for a child with special needs, regardless of the QAEs they paid. However, other specific criteria must be met to take the adoption credit. Married taxpayers must file a joint tax return. Their MAGI must also be below $252,150 in 2024 to receive the full adoption credit amount. Finally, the adoption must be final in the year the adoption credit is claimed.

The adoption credit is a non-refundable tax credit. Therefore, the amount of credit cannot exceed the taxpayer's tax liability. Any unused adoption tax credits can be carried forward for up to five years.

The adoption tax credits are reported on Form 8839, Qualified Adoption Expenses, Part II, Adoption Credit, which flows to Schedule 3 (Form 1040), Additional Credits and Payments, Line 6c, Adoption Credit. Attach Form 8839.

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NATP Staff

The NATP team is dedicated to supporting tax professionals with expert insights, industry updates and resources that help them serve their clients with confidence.

Information included in this article is accurate as of the publication date. This post does not reflect tax law changes or IRS guidance that may have occurred after the publishing date.