Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
There are two primary types of adoption benefits in the U.S. Tax Code: a tax credit for qualified adoption expenses (Form 8839), and the exclusion of qualified employer-provided adoption assistance from some federal withholdings.
According to the IRS, qualified expenses for both benefits include reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses, and other expenses that are directly related to the adoption.
Three types of adoptions make you eligible for the tax benefits, and the rules are slightly different for each:
How the adoption tax credit works
For a brief two years—2010 and 2011—the adoption tax credit was refundable. Refundable tax credits can bring the amount of tax you owe to below zero. When the total of the credits is greater than the tax you owe, the IRS sends you the difference in the form of a refund.
But in 2013, the credit for tax year 2012—a maximum of $12,650 per child—is purely nonrefundable. With a nonrefundable tax credit, your savings cannot be used to increase your tax refund or give you a refund when you otherwise would not have received one.
You can use the tax credit until the limit of $12,650 per adopted child is reached, and/or until the child is adopted and all costs are paid, as follows:
The limit is based on the credit or employee benefit available in the year of adoption. Be sure to keep proof of all expenses, and read up on which expenses are allowable.
Treat the employer-paid benefits as follows:
When adopting foreign children, the adoption must be final in order for you to claim the expenses.
Tax benefits for adopting children with special needs
There is a unique tax benefit for the adoption of children with special needs. In the year the adoption is final, you may claim the full amount of the tax credit—even if you haven’t paid anything for the adoption—if all of the following conditions are met:
Circumstances that could make you ineligible for the tax credit
What children are not eligible for the credit? You cannot claim a tax credit or benefits for adopting family members (for example, nieces or nephews), nor can you receive the benefits if you marry and adopt your new spouse’s child or children.
If your income is too high, you are also not eligible to claim the adoption tax credits. For 2013, the income phase-out range is between $194,580 and $234,580.
If you were involved in an adoption in the last three years and didn’t claim these tax credits, you may want to consider amending the prior year’s tax return to get those refunds.
Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.