What expenses qualify for the Child Adoption Tax Credit? Confused about eligible costs

Thanks so much for this detailed response! I had no idea travel expenses could count - we've made three trips to meet with the birth mother in another state and stayed in hotels each time. Would those hotel bills and meals during those trips count? Also, we paid for some counseling services for the birth mother - is that considered part of "reasonable birth mother expenses"?

Yes, those hotel bills and meals during your trips to meet with the birth mother would typically count as qualified adoption expenses, as they're directly related to the adoption process. Just make sure to keep all receipts and documentation showing the purpose of the travel. Regarding counseling services for the birth mother, these would generally be considered reasonable birth mother expenses if they're legal in your state and directly connected to the adoption. These services are typically viewed as supporting the adoption process, especially if they were arranged through or recommended by your adoption agency. Again, documentation is key - make sure you have records showing these expenses were specifically for adoption-related counseling.

Did it help with international adoption expenses? We're in the process of adopting from South Korea and the rules seem different for international vs domestic adoptions. So many extra fees for translation, immigration, etc.

How accurate is this really? I'm always skeptical of these tax tools. Did you have any issues with the IRS after using their recommendations? I've been burned before by tax software that claimed things were deductible when they weren't.

It absolutely handles international adoptions! The tool specifically asked whether our adoption was domestic or international because the timing rules for claiming the credit are different. For international adoptions, you can only claim the credit in the year the adoption is finalized, while domestic adoptions allow for expenses from previous years. It correctly categorized all our translation fees and immigration costs. I completely understand the skepticism - I felt the same way. In our case, we actually had our tax professional review everything after using taxr.ai, and she was impressed with the accuracy. She only made minor adjustments to how we categorized two expenses. We filed in April 2024 and haven't had any issues with the IRS. The detailed documentation the tool helped us create would definitely be helpful if we ever did face questions.

How exactly does this work? I don't understand how a third-party service can somehow get you through the IRS phone system when millions of people can't get through directly. Sounds too good to be true.

I call BS on this. No way some random service can magically get through to the IRS when their phone lines are constantly jammed. Probably just records your personal info and sells it. The IRS is basically unreachable during tax season, everyone knows that.

It works by using automated technology to continually call the IRS and navigate through their phone tree until it reaches a place in the queue. When you're next up to speak with an agent, they call you and connect you. It's basically doing what you'd do manually (calling repeatedly until getting through) but with automation. Look, I was skeptical too. But after spending nearly three weeks trying to get through about our adoption credit documentation (which the IRS was questioning), I was desperate. The IRS wanted additional documentation for some expenses related to our birth mother's housing costs, and the deadline was approaching. I tried Claimyr as a last resort, and within about 35 minutes I was speaking with an actual IRS agent who helped clarify exactly what documents they needed. Saved our $14,000 credit from being denied. Not selling anything here - just sharing what worked when I was in a desperate situation with a questioned adoption credit claim.

Wait, so if my company offers $10,000 in adoption benefits and our adoption costs $25,000 total, we can only claim the tax credit on $15,000? Are there any situations where the employer benefit doesn't reduce the credit?

That's exactly right. If your company provides $10,000 in adoption benefits and your total qualified adoption expenses are $25,000, you can only claim the adoption tax credit on the remaining $15,000. The employer benefit directly reduces the amount of expenses eligible for the credit. The only situation where this wouldn't apply is if your income is high enough that you phase out of being able to use the full adoption tax credit. There are income limits where the credit starts to phase out (around $236,000 for 2024 filing, likely higher for 2025). If you're in that range, the calculations get more complicated and you might want to consult with a tax professional who specializes in adoption.

Yes! This is actually specifically addressed in the tax code. Expenses from a failed or unsuccessful adoption attempt ARE eligible for the adoption tax credit. You claim them in the tax year after the year the expenses were paid. So if your failed adoption expenses were paid in 2024, you'd claim them on your 2025 tax return alongside any qualifying expenses from your successful adoption.

Great questions! Yes, prenatal and delivery medical expenses for the birth mother that you pay are generally considered qualifying adoption expenses, as long as they're legal in your state and directly related to the adoption. These fall under "reasonable birth mother expenses" that others have mentioned. For the certified documents - absolutely! Getting certified copies of birth certificates, marriage certificates, divorce decrees, and other official documents required for the adoption process are all qualifying expenses. Keep those receipts! Even notarization fees for adoption-related documents typically count. Just make sure you're keeping detailed records of what each expense was for and how it relates to the adoption. The IRS likes to see clear connections between expenses and the adoption process, especially for birth mother expenses. Having documentation from your agency showing these were necessary adoption-related costs really helps if you ever face questions.

This timing information is so crucial - thank you for bringing this up! I wish I had known about this earlier in our process. We're currently in 2025 and paid most of our expenses in 2024, but our adoption won't be finalized until later this year. So even though we paid everything last year, we won't be able to claim the credit until we file our 2026 taxes, right? Also, the carry-forward provision is really good to know about. Our qualified expenses are looking like they'll be around $22,000, so it sounds like we'd be able to use the full credit amount this year and then carry forward the remaining balance. Do you know if there are any income limitations that might affect our ability to use the full credit or the carry-forward amounts?