March 4, 2013
Financial Impacts of Adoption
If you have recently adopted a child or are considering adopting, find out about important tax incentives for adoptive parents that could benefit you.
If you've recently adopted a child, or are planning to, you know how expensive it can be. Fortunately, the federal government provides significant tax incentives for adoptive parents, including a generous tax credit.
In addition, qualified expenses paid through an employer's adoption assistance program are excluded from your taxable income – a big savings. The amount of adoption tax credit you can claim depends on many factors, including: your income level and tax-filing status, whether you're adopting a special needs child, and the child's citizenship status. Adoption tax credit rules are very complicated, so carefully read the information provided at irs.gov.
Bottom line: Adoption is an extremely generous act. Make sure you're taking full advantage of the financial incentives.
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