You Make the Call - Sept. 7, 2023

Question: Barb and Ahna celebrated the completion of the adoption process for their first child in 2023. The child does not have special needs. Their qualified adoption expenses were $7,000. While organizing their paperwork, they discovered they had spent $5,000 on a prior unsuccessful domestic adoption two years ago. They never claimed these 2021 expenses on any tax return. Would the $5,000 still be available to them as a current-year adoption credit?

Answer: Yes. The expenses incurred in an unsuccessful domestic adoption are included with those of the subsequent adoption attempt, regardless of whether the subsequent attempt was successful. The per-child, cumulative adoption credit dollar limitation is $15,950 for 2023. In applying the dollar limit, Barb and Ahna may combine the expenses of the multiple attempts to adopt one eligible U.S. child.