1. What is the Adoption Tax Credit?

The Adoption Tax Credit is a federal tax credit that helps families offset qualified adoption expenses. For 2025, the maximum credit is $16,000, calculated as 10% of qualified expenses up to this limit.

2. How Does the Calculator Work?

The calculator uses the adoption credit formula:

Where:

• \( Qualified\ Expenses \) — Eligible adoption-related costs (USD)
• \( 0.1 \) — 10% credit rate
• \( \$16000 \) — Maximum credit amount for 2025

Explanation: The credit equals 10% of your qualified adoption expenses, but cannot exceed $16,000 for the 2025 tax year.

3. Importance of Adoption Credit

Details: The adoption tax credit makes adoption more affordable for families, helping to cover costs like agency fees, court costs, attorney fees, and travel expenses related to the adoption.

4. Using the Calculator

Tips: Enter your total qualified adoption expenses in USD. The calculator will compute your potential tax credit up to the $16,000 maximum for 2025.

5. Frequently Asked Questions (FAQ)

Q1: What expenses qualify for the adoption credit?
A: Qualified expenses include adoption fees, court costs, attorney fees, traveling expenses, and other directly related costs.

Q2: Is there an income limit for claiming the credit?
A: Yes, the credit phases out for taxpayers with modified adjusted gross income above certain thresholds.

Q3: Can I claim the credit for international adoptions?
A: Yes, the credit applies to both domestic and international adoptions of eligible children.

Q4: When can I claim the adoption credit?
A: Generally, you can claim the credit in the year the adoption becomes final, or in the year you pay qualified expenses.

Q5: Is this a refundable credit?
A: The adoption credit is non-refundable but can be carried forward for up to 5 years if not fully used.