Tax Benefits for Adoption

There are two important tax breaks for those who adopt special needs children: an exclusion of up to $13,360 paid under an employee benefit plan that pays for adoption expenses, and a tax credit for up to $13,360 for expenses that were not reimbursed by your employer. The credit amount also applies for adoptions of children who are U.S. citizens or residents, and are determined to be "special needs children" by a state, even if the actual adoption expenses are less than that.

However, both tax breaks begin to be phased out for those with adjusted gross income (AGI) over $185,210. If your AGI is $225,210 or more, you can't claim any tax benefits for adoptions.

For more information, check out the following:

• qualifying expenses for adoption benefits
• dollar limits on adoption expenses
• claiming the adoption exclusion or credit