2018 Adoption Credit
For 2018, the Adoption Credit figures are $13,810 (Maximum credit), $207,140 (Phase-out threshold) and $247,140 (Fully phased out).
Effective 2018-01-01Source: Rev. Proc. 2018-18 (Internal Revenue Bulletin 2018-10) (IRS)Verified 2026-09-02
Compared with 2017
| Item | 2017 | 2018 | Change |
|---|---|---|---|
| Maximum credit | $13,570 | $13,810 | +$240 (+1.8%) |
| Phase-out threshold | $203,540 | $207,140 | +$3,600 (+1.8%) |
| Fully phased out | $243,540 | $247,140 | +$3,600 (+1.5%) |
Who it applies to
Taxpayers who adopted a child or incurred qualified adoption expenses in taxable years beginning in 2018
What changed this year, and why
For taxable years beginning in 2018, the maximum adoption credit is $13,810 per eligible child. The credit phases out for taxpayers with modified adjusted gross income between $207,140 and $247,140.
Common questions
- How much is the adoption credit worth?
- The maximum adoption credit is $13,810 per eligible child for taxable years beginning in 2018. For a child with special needs, the full credit is available regardless of actual expenses. For other adoptions, the credit is limited to qualified adoption expenses up to $13,810.
- Is the adoption credit subject to income limits?
- The credit begins to phase out for taxpayers with modified adjusted gross income above $207,140 and is completely eliminated for those with modified adjusted gross income of $247,140 or more.
The credit shrinks as income rises
The 2018 adoption credit of up to $13,810 per eligible child is reduced for higher-income taxpayers. When your modified adjusted gross income (MAGI) exceeds $207,140, the credit begins to shrink proportionally. The reduction continues as income rises through the phaseout range. Once MAGI reaches $247,140 or more, the credit is eliminated entirely and you cannot claim any amount. Taxpayers with MAGI at or below $207,140 receive the full credit without reduction. The phaseout applies to both the adoption credit and the employer-provided adoption benefits exclusion, using the same income thresholds and the same modified adjusted gross income measure.
2018 maximum credit. The maximum credit and the exclusion for employer-provided benefits are both $13,810 per eligible child in 2018. This amount begins to phase out if you have modified adjusted gross income in excess of $207,140 and is completely phased out for modified adjusted gross income of $247,140 or more.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The credit and the employer exclusion cannot cover the same expense
When you pay qualified adoption expenses, you may be eligible for both a tax credit and an exclusion for employer-provided adoption benefits. However, you cannot claim both benefits for the same dollar of expenses. If your employer pays or reimburses part of your adoption costs, that amount can be excluded from your income, but you cannot also take a credit against those same dollars. You may still use the credit for other qualified expenses you paid out of pocket. This rule prevents double-dipping by ensuring each dollar of expense supports only one tax benefit. Both the credit and the exclusion are capped at $13,810 per eligible child in 2018.
But, you can't claim both a credit and exclusion for the same expenses.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Unused credit carries forward
If the adoption credit you calculate for 2018 exceeds the tax liability you can offset this year, the unused portion does not disappear. Instead, you may carry the remaining credit forward for up to 5 years, or until it is fully used, whichever occurs first. The amount you can carry forward depends on the difference between the credit you figured and the amount you were able to claim in the current tax year. You must use the Adoption Credit Carryforward Worksheet to calculate the exact amount. Keep the worksheet for your records, as you will need it to figure your credit in future years when you apply the carryforward.
If Form 8839, line 15, is smaller than line 14, you may have an unused credit to carry forward to the next 5 years or until used, whichever comes first.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
MAGI for the credit adds back income excluded because you live abroad or in a territory
For the 2018 Adoption Credit, your modified adjusted gross income (MAGI) starts with the adjusted gross income shown on your tax return but adds back certain amounts you otherwise excluded. If you file Form 1040, take the amount from line 7 and increase it by the total of any exclusion of income from Puerto Rico plus amounts from Form 2555 (lines 45 and 50), Form 2555-EZ (line 18), or Form 4563 (line 15). These additions apply when you live abroad or in a U.S. territory and exclude that income from your regular AGI. The result is the MAGI the IRS uses to decide whether your credit phases out. For 2018, the credit begins to phase out at MAGI of $207,140 and is fully phased out at $247,140. Filers on Form 1040NR simply use line 36 with no add-backs. This MAGI figure is entered on line 7 of Form 8839 and controls the income limit on the adoption credit and exclusion for the year.
Form 1040 Form 1040, line 7, increased by the total of any: • Exclusion of income from Puerto Rico and • Amounts from– • Form 2555, lines 45 and 50, • Form 2555-EZ, line 18, and • Form 4563, line 15.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Expenses paid before a domestic adoption is final wait a year
For the 2018 Adoption Credit, the timing of when you can claim expenses depends on when the adoption becomes final. Under the domestic adoption rules, if you pay qualifying expenses in any year before the year the adoption becomes final, you take the credit in the year after the year of the payment. This means expenses paid before finalization are not claimed immediately; they wait until the following tax year. Once the adoption is final, expenses paid in that year are claimed in that same year, and expenses paid after finalization are claimed in the year of payment. This timing rule applies to U.S. children, where the credit can be claimed even if the adoption never became final. For example, if you paid expenses in 2017 for a domestic adoption that became final in 2018, you would claim the 2017 expenses on your 2018 return. The maximum credit for 2018 is $13,810 per child, subject to income phase-outs beginning at MAGI of $207,140.
IF you pay qualifying expenses in... THEN take the credit in... Any year before the year the adoption becomes final* The year after the year of the payment.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The form that claims it, and the order its parts are filled in
To claim the 2018 Adoption Credit, you must complete Form 8839, Part III, before you can figure the credit, if any, in Part II. This ordering requirement exists because Part III calculates the exclusion for employer-provided adoption benefits under a written qualified adoption assistance program. Any expenses reimbursed by your employer cannot also be claimed as qualified adoption expenses for the credit. Form 8839 coordinates these two tax benefits - the nonrefundable credit in Part II and the exclusion in Part III - so you do not double-count the same expenses. The form has multiple parts, and Part III must be finished first because it determines which expenses remain available for the credit calculation. For 2018, the maximum credit is $13,810 per eligible child, but this amount phases out for taxpayers with modified adjusted gross income between $207,140 and $247,140. Note that if your employer is an S corporation in which you hold a significant ownership stake, you cannot exclude employer-provided adoption benefits.
For purposes of calculating the adoption credit in Part II, qualified adoption expenses don't include expenses reimbursed by an employer under a written qualified adoption assistance program (see Employer-Provided Adoption Benefits). For this reason, you must complete Form 8839, Part III, before you can figure the credit, if any, in Part II.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
What happens if the adoption falls through
For the 2018 Adoption Credit, if you paid qualified adoption expenses in an attempt to adopt a U.S. child and the attempt was unsuccessful, you treat those expenses the same way as expenses paid for adoptions not final by the end of the year. This means the expenses are not lost; instead, they follow the timing rule for pre-finalization payments. For domestic adoptions of U.S. children, expenses paid in any year before the adoption becomes final are claimed in the year after the year of payment. Expenses paid in one year for an unsuccessful attempt may therefore qualify on a later year's return. The maximum credit for 2018 is $13,810 per child, and the credit phases out for taxpayers with modified adjusted gross income between $207,140 and $247,140. This rule allows families to claim expenses even when an adoption does not succeed, as long as the child was a U.S. citizen or resident. The expenses are entered on Form 8839 in the same manner as pre-finalization domestic adoption expenses.
Unsuccessful adoption. If you paid qualified adoption expenses in an attempt to adopt a U.S. child and the attempt was unsuccessful, treat those expenses in the same manner as expenses you paid for adoptions not final by the end of the year.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Whether the credit is refundable, or only reduces what you owe
The 2018 adoption credit is nonrefundable, meaning it can only reduce the federal income tax you owe dollar for dollar. If the credit exceeds your tax liability, the excess is not refunded to you. However, any unused portion of the credit can be carried forward to future tax years. To determine how much of the credit you can use in a given year, you must complete the Credit Limit Worksheet included in the instructions for Form 8839. This worksheet compares the credit amount to your tax liability after subtracting certain other nonrefundable credits, and the allowable credit is limited to the smaller of those two figures. For 2018, the maximum adoption credit was $13,810 per eligible child, subject to a phase-out based on modified adjusted gross income. The credit began to phase out at $207,140 of MAGI and was fully phased out at $247,140 or more.
Complete the credit limit worksheet to figure the limit of your nonrefundable adoption credit.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
What counts as a qualified adoption expense
For the 2018 Adoption Credit, the IRS defines qualified adoption expenses as costs that are reasonable and necessary, directly connected to the legal adoption of an eligible child, and incurred for that principal purpose. Eligible costs include adoption fees paid to an agency, attorney fees and court costs associated with the adoption process, and travel expenses - including meals and lodging - incurred while away from home for the adoption. If the child is from another country, re-adoption expenses (the legal steps needed to finalize the adoption under U.S. or state law) also qualify. The credit is worth up to $13,810 per eligible child. Expenses do not qualify if they were paid for with funds from a state, local, or federal assistance program; if they violated state or federal law; if they related to a surrogate parenting arrangement; if they were for the adoption of a spouse's child; if the taxpayer was reimbursed by an employer or any other source; or if the same expenses were claimed under another provision of federal income tax law. The credit begins to phase out for taxpayers with modified adjusted gross income above $207,140 and is fully phased out at $247,140.
Qualified adoption expenses are reasonable and necessary expenses directly related to, and for the principal purpose of, the legal adoption of an eligible child.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Adopting your stepchild does not qualify for the credit
The 2018 Adoption Credit allows taxpayers to claim up to $13,810 for qualified adoption expenses, but the IRS specifically excludes expenses incurred for adopting a spouse's child from qualifying. A spouse's child - commonly called a stepchild - is treated differently from other eligible children under the adoption credit rules, even if you are legally adopting that child. This exclusion applies regardless of the amount spent or whether the adoption has been finalized. If you paid adoption-related costs for your spouse's child, those expenses cannot be counted toward the 2018 credit, even if they would otherwise qualify as reasonable and necessary adoption expenses. The credit begins to phase out for taxpayers with modified adjusted gross income above $207,140 and is fully eliminated once income reaches $247,140, but the spouse's-child exclusion applies independently of income level.
Qualified adoption expenses don't include expenses: • For which you received funds under any state, local, or federal program; • That violate state or federal law; • For carrying out a surrogate parenting arrangement; • For the adoption of your spouse's child;
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Who decides a child has special needs
For the 2018 Adoption Credit, a child with special needs is not identified by a doctor, adoption agency, or adoptive parent. The determination rests with the state, which includes the District of Columbia. The state must make three findings about a U.S. citizen or resident child: that the child cannot or should not be returned to the parents' home, and that the child will not be adopted unless assistance is provided to the adoptive parents. States look at factors such as the child's age, ethnic background, membership in a sibling or minority group, and any medical condition or physical, mental, or emotional handicap when deciding whether assistance is needed. A child's condition alone is not enough; the state must formally make the special-needs determination before the child is treated as a child with special needs for the credit.
3. The state has determined that the child won't be adopted unless assistance is provided to the adoptive parents. Factors used by states to make this determination include: a. The child's ethnic background and age, b. Whether the child is a member of a minority or sibling group, and c. Whether the child has a medical condition or a physical, mental, or emotional handicap. The state must make a determination that a child has special needs before the child is considered to be a child with special needs.
2018 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2018-18 (Internal Revenue Bulletin 2018-10) (IRS)
- Maximum credit
under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,810.
- Phase-out threshold
The available adoption credit begins to phase out under § 23(b) (2)(A) for taxpayers with modified ad- justed gross income in excess of $207,140
- Fully phased out
The available adoption credit begins to phase out under § 23(b) (2)(A) for taxpayers with modified ad- justed gross income in excess of $207,140 and is completely phased out for taxpayers with modified adjusted gross income of $247,140 or more.