Tax Credits for Adoption in Texas?

If you’re considering the option of adoption, you may be wondering if there are any tax credits available to help offset the costs. Luckily, Texas does offer some tax credits to people adopting children—but there are some important rules and regulations that you should know about before claiming your credit.

Eligibility for Adoption Tax Credits in Texas

In order to qualify for a tax credit for adoption, you must meet several criteria. The adopted child must be under 18 years old or physically or mentally unable to care for themselves. In addition, the adoptive parent must itemize deductions on their taxes and have paid qualified adoption expenses such as legal fees, court costs, agency fees, home study costs, and travel costs. Qualified expenses can also include necessary medical care or counseling services related to the adoption process.  For adoptions finalized in 2022, there is a federal adoption tax credit of up to $14,890 per child. The 2022 adoption tax credit is NOT refundable, which means taxpayers can only use the credit if they have federal income tax liability

The maximum amount of qualified expenses eligible for the credit is $14,890 per child per year (as of 2022). This amount will decrease if your total income exceeds certain thresholds. For example, if your income is over $263,410 per year (as of 2022), then you will not be eligible for any credit at all. Additionally, it is important to note that this credit must be taken in the same year that the qualified expenses were incurred; you cannot apply them retroactively.

Other Things to Know About Tax Credits For Adoption in Texas

It’s also important to note that this credit does not apply if you are adopting a relative or stepparent; those adoptions are not eligible for this type of credit. Additionally, even if you do qualify for a tax credit, it may still take some time before you receive it; refunds related to adoption credits can take up to 16 weeks after filing your return with the IRS. Furthermore, if more than one person adopted the same child—for example, two married couples—then only one of them is eligible for the full tax credit; the other person would only be able to claim half of it (up to a maximum amount).

Plano Adoption Attorney

While it can certainly help defray some of the costs associated with adoption in Texas, understanding how much money qualifies for these tax credits and whether you qualify can be difficult and overwhelming. However, by understanding what is covered by qualified expenses and making sure that all paperwork is filed correctly and on time can save both time and money in the long run when it comes time to file taxes related to an adoption in Texas. With careful planning and an understanding of how this system works, prospective adoptive parents can make sure they get back everything they deserve from their hard work! If you need legal help navigating the adoption process, contact The Fox Firm for a consultation today!