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11814: 8839 - Adoption Credit


1040 Individual Generally

What is the maximum credit per child allowed on Form 8839 - Adoption Credit?
 

The maximum credit per child allowed for tax year 2019 is $14,080. This amount is reduced by any employer-paid benefits. Form 8839 can be e-filed.

Rules:

  • There are limits and phase out ranges depending on income: 
Adoption Credit Limits
 Year  Maximum Credit  MAGI must be less than...  Phase out range
 2019 $14,080 $251,160 $211,161 - $251,159
 2018 $13,810 $247,140 $207,141 - $247,139
 2017 $13,570 $243,540 $203,540 - $241,539
 2016 $13,460 $241,920 $201,920 - $241,919
 2015 $13,400 $241,010 $201,011 - $241,009
 2014 $13,190 $237,880 $197,880 - $237,879
  • Filing status must be MFJ, S, HOH, QW; or MFS if the spouse did not live with the taxpayer for last six months of tax year and other conditions are met.
  • If the child adopted has special needs, the credit may be available even if there were no adoption expenses in the tax year.

Rules for Special Needs Child:

In the case of an adoption of a child with special needs that became final in the current tax year, a full credit is allowed regardless of expenses. The allowable credit for a tax year is phased out for higher-income taxpayers.

If the adopted child is a special-needs adoption, go to the 8839 screen and make the appropriate selection from the drop list for the box Child with special needs. If the adoption became final in the current tax year, select F – Adoption was finalized in current tax year in the drop list, and enter the full credit (less expenses for the child claimed in a prior year) on line 5, even if your qualified adoption expenses were less than the maximum credit and even if you did not have any qualified adoption expenses. For other years, select X - Carryover year or year prior to adoption being final in the drop list. 

Notes:

  • Review the IRS instructions when preparing Form 8839.
  • The Adoption Credit is a non-refundable credit.
  • For line 3 “Total of line 3 and 6 from most recent Form 8839 filed for child” on screen 8839, note that the IRS Instructions state

If you filed Form 8839 for a prior year for the same child, enter on line 3 the total of the amounts shown on lines 3 and 6 (or corresponding line) of the last form you filed for the child.

  • For line 5 Qualified adoption expense in 20YY, review the 8839 field Help screen (press F1), before entering an amount. 
  • The software takes the Adoption Credit into account before the Child Tax Credit per the Line 11 Worksheet.
    • This worksheet is found in Publication 972, Child Tax Credit, and may determine if the Child Tax Credit will be used before the other credits to reduce tax. 
    • In Drake Tax, review worksheet Wks 8812.PG2, which is the Line 11 Worksheet.

For more information, review the IRS Instructions for Form 8839.


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