2008 and 2009 adoption credit

Adoption credit rises for 2008 and 2009

This credit will benefit most taxpayers who add children to their families through adoption.

The maximum adoption credit for families rises to $11,650 in 2008.

The credit for adopting children with special needs rises to $11,650.

Also, a taxpayer can exclude from gross income as much as $11,650 for amounts paid or expenses incurred under his employer's adoption-assistance program.

The credit starts to be phased out when adjusted gross income hits $174,730 and phases out completely when adjusted gross income exceeds $214,730.

In 2009, the adoption credit will to rise $12,150 for standard adoptions plus $12,150 for children with special needs. Also, the maximum exclusion from gross income for amounts paid or expenses incurred under an employer's adoption-assistance program will increase to $12,150.

The credit will start to be phased out when adjusted gross income hits $182,180 and will be phased out completely when it exceeds $222,180.

To claim the credit, file Form 8839 (.pdf file).

For more information, check IRS Tax Top 607 or IRS Publication 4156: From Birth through Childhood (.pdf file).

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