Tax benefits for adoption include both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion from income for employer-provided adoption assistance. The credit is nonrefundable, which means it is limited to your tax liability for the year. However, any credit in excess of your tax liability may be carried forward for up to five years. The maximum amount (dollar limit) for 2015 is $13,400 per child.
Qualified adoption expensesFor both the credit and the exclusion, qualified adoption expenses, defined in section 23(d)(1) of the Code, include:
Reasonable and necessary adoption fees,
Court costs and attorney fees,
Traveling expenses (including amounts spent for meals and lodging while away from home), and
Other expenses that are directly related to and for the principal purpose of the legal adoption of an eligible child.
An expense may be a qualified adoption expense even if the expense is paid before an eligible child has been identified. For example, prospective adoptive parents who pay for a home study at the outset of an adoption effort may treat the fees as qualified adoption expenses.
An eligible child is an individual who is under the age of 18, or is physically or mentally incapable of self-care.
Qualified adoption expenses do not include expenses that a taxpayer pays to adopt the child of the taxpayer’s spouse.
Qualified adoption expenses include expenses paid by a registered domestic partner who lives in a state that allows same-sex second parent or co-parent to adopt his or her partner’s child, adoption expenses and that otherwise qualify for the credit.
READ MORE HERE about eligibility and how to file.