Foster Care Adoption Tax Credit Calculator

Foster Care Adoption Tax Credit Formula:

\[ Credit = \min(Qualified\ Expenses,\ 16,810) \times Phaseout\ Factor \]

Qualified Adoption Expenses:

Modified Adjusted Gross Income:

Filing Status:

Adoption Tax Credit:

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1. What is the Foster Care Adoption Tax Credit?

The Foster Care Adoption Tax Credit is a non-refundable tax credit designed to help families offset qualified adoption expenses. For 2025, the maximum credit is $16,810 per child, with income phaseouts that reduce the credit amount for higher-income taxpayers.

2. How Does the Calculator Work?

The calculator uses the adoption tax credit formula:

\[ Credit = \min(Qualified\ Expenses,\ 16,810) \times Phaseout\ Factor \]

Where:

$ Qualified\ Expenses $ — Actual adoption costs incurred (up to $16,810 maximum)
$ Phaseout\ Factor $ — Reduction factor based on modified adjusted gross income
$ 16,810 $ — Maximum credit amount per child for 2025

Explanation: The credit equals the lesser of qualified expenses or the maximum credit amount, reduced by a phaseout percentage for taxpayers with modified AGI between $252,150 and $292,150.

3. Importance of Adoption Tax Credit

Details: This tax credit helps make adoption more affordable for families, particularly those adopting children from foster care. It can significantly reduce federal tax liability and support families in providing permanent homes for children in need.

4. Using the Calculator

Tips: Enter qualified adoption expenses in dollars, modified adjusted gross income, and select your filing status. Qualified expenses include adoption fees, court costs, attorney fees, travel expenses, and other directly related costs.

5. Frequently Asked Questions (FAQ)

Q1: What qualifies as adoption expenses?
A: Qualified expenses include adoption fees, court costs, attorney fees, traveling expenses, and other expenses directly related to the legal adoption of an eligible child.

Q2: Is the credit refundable?
A: No, the adoption tax credit is non-refundable, meaning it can reduce your tax liability to zero but cannot generate a refund beyond taxes paid.

Q3: Can I claim the credit for international adoptions?
A: Yes, the credit applies to both domestic and international adoptions, though special rules may apply to international cases.

Q4: What is the income phaseout range?
A: For 2025, the credit phases out for modified AGI between $252,150 and $292,150, regardless of filing status.

Q5: How long can I carry forward unused credit?
A: Unused adoption tax credit can be carried forward for up to 5 years, as it is non-refundable but can offset future tax liability.