2020 Adoption Credit
For 2020, the Adoption Credit figures are $14,300 (Maximum credit), $214,520 (Phase-out threshold) and $254,520 (Fully phased out).
Effective 2020-01-01Source: Rev. Proc. 2019-44 (IRS)Verified 2026-09-02
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Maximum credit | $14,080 | $14,300 | +$220 (+1.6%) |
| Phase-out threshold | $211,160 | $214,520 | +$3,360 (+1.6%) |
| Fully phased out | $251,160 | $254,520 | +$3,360 (+1.3%) |
Who it applies to
Taxpayers who paid qualified adoption expenses or who adopted a child with special needs, for taxable years beginning in 2020.
What changed this year, and why
For taxable years beginning in 2020, the maximum adoption credit under IRC § 23 is $14,300 per child. The credit phases out for taxpayers with modified adjusted gross income above $214,520 and is fully phased out at $254,520 or more.
Common questions
- Can I claim the full $14,300 if I did not spend that much on an adoption?
- The maximum credit for 2020 is $14,300. If you adopt a child with special needs, you may claim the full $14,300 credit regardless of actual expenses. For other adoptions, you may claim qualified adoption expenses up to $14,300.
- What income level causes the credit to phase out?
- The credit begins to phase out when your modified adjusted income exceeds $214,520. It is fully phased out once your modified adjusted income reaches $254,520.
- Does this credit apply to tax year 2020 only?
- It applies to taxable years beginning in 2020.
The credit shrinks as income rises
The 2020 adoption credit is subject to an income phaseout based on modified adjusted gross income (MAGI). If your MAGI exceeds $214,520, the credit begins to shrink. Once your MAGI reaches $254,520 or more, the credit is completely eliminated and you cannot claim it at all. Taxpayers with MAGI at or below the $214,520 threshold are eligible for the full maximum credit of $14,300 per eligible child, subject to other limitations such as qualified expense amounts. The same phaseout range applies to both the adoption credit and the employer-provided adoption benefits exclusion, since both share the same $14,300 per-child limit and the same income-based reduction.
The maximum credit and the exclusion for employer-provided benefits are both $14,300 per eligible child in 2020. This amount begins to phase out if you have modified adjusted gross income in excess of $214,520 and is completely phased out for modified adjusted gross income of $254,520 or more.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The credit and the employer exclusion cannot cover the same expense
While you can claim both the adoption credit and the exclusion for employer-provided adoption benefits for the expenses of adopting an eligible child, you cannot claim both a credit and an exclusion for the same expenses. Each dollar of qualified adoption expense can be used for either the credit or the exclusion, but not both. For example, depending on the cost of the adoption, you may be able to exclude up to $14,300 from your income and also claim a credit of up to $14,300, but these must come from different expenses.
You can claim both the exclusion and the credit for expenses of adopting an eligible child. For example, depending on the cost of the adoption, you may be able to exclude up to $14,300 from your income and also be able to claim a credit of up to $14,300. But, you can't claim both a credit and exclusion for the same expenses.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Unused credit carries forward
If the adoption credit you are entitled to exceeds the amount you can use in the current tax year, the unused credit carries forward. The IRS provides an Adoption Credit Carryforward Worksheet to calculate the amount you can carry forward. You should keep this worksheet if you have any unused credit to carry forward to 2021, as you will need it to figure your credit for that year.
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.
2020 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 2020, the federal adoption credit and exclusion are subject to a modified adjusted gross income (MAGI) phase-out. The MAGI figure is not simply the adjusted gross income shown on your return. The IRS instructions require you to start with the AGI from your Form 1040, 1040-SR, or 1040-NR and increase it by any income you excluded because you live abroad or in a U.S. territory. Specifically, you add back the exclusion of income from Puerto Rico, amounts reported on Form 2555 (lines 45 and 50, which relate to foreign earned income), and amounts from Form 4563 (line 15, which relates to income from American Samoa). This means that taxpayers who benefit from exclusions tied to living outside the United States must still count that excluded income when determining whether the $14,300 adoption credit phases out. Once MAGI reaches the fully phased-out threshold, no credit or exclusion is available.
Enter on line 7 the amount from Form 1040, 1040-SR, or 1040-NR, line 11, increased by the total of any: • Exclusion of income from Puerto Rico; • Amounts from Form 2555, lines 45 and 50; and • Amount from Form 4563, line 15.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Expenses paid before a domestic adoption is final wait a year
For a domestic adoption of a U.S. child, the timing of when you can claim the adoption credit depends on when the adoption becomes final and when you paid the expenses. 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. Once the adoption is final, expenses paid in the year of finalization are claimed in that same year, and expenses paid in any year after finalization are claimed in the year of payment. This rule applies only to domestic adoptions; for foreign adoptions, the credit can only be claimed in the year the adoption becomes final regardless of when expenses were paid. The $14,300 maximum credit applies to qualified expenses paid according to these timing rules.
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. the year the adoption becomes final the year the adoption becomes final. any year after the year the adoption becomes final the year of the payment.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The form that claims it, and the order its parts are filled in
The federal adoption credit and exclusion are both reported on Form 8839. The form is divided into multiple parts that must be completed in a specific order. Before you can calculate the adoption credit in Part II, you must complete Form 8839, Part III, which deals with employer-provided adoption benefits under a written qualified adoption assistance program. This sequencing requirement exists because qualified adoption expenses used to figure the credit in Part II do not include any expenses that were reimbursed by your employer. Part III determines the amount of employer-provided benefits you received, and those amounts reduce the expenses available for the credit calculation. The form ensures that taxpayers do not receive a double benefit by claiming both a credit for expenses they paid and an exclusion for the same expenses reimbursed by their employer.
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.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
What happens if the adoption falls through
If you pay qualified adoption expenses in an attempt to adopt a U.S. child but the adoption attempt is unsuccessful, you do not lose the ability to claim the credit entirely. Instead, you treat those expenses in the same manner as expenses paid for adoptions that are not final by the end of the year. Under this rule, if you pay expenses before the adoption becomes final, you claim the credit in the year after the year of payment. This means that expenses paid in an unsuccessful adoption attempt can still qualify for the credit, just on a delayed timeline. The credit is limited to the $14,300 maximum amount, and expenses from multiple years of unsuccessful attempts can be aggregated, with each year's expenses claimed in the following year according to the timing rules for unfinalized adoptions.
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.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Whether the credit is refundable, or only reduces what you owe
The 2020 adoption credit is nonrefundable: it can reduce your federal income tax to zero, but it does not produce a refund by itself. You must complete the Credit Limit Worksheet to figure how much of the credit can actually be used against your 2020 tax liability. The maximum credit for 2020 is $14,300 per eligible child, and it phases out for taxpayers with modified adjusted gross income between $214,520 and $254,520. Because the credit only offsets tax you owe, how much of it you can use in 2020 depends on your tax liability that year.
Complete the credit limit worksheet to figure the limit of your nonrefundable adoption credit.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
What counts as a qualified adoption expense
Qualified adoption expenses are costs directly tied to the legal adoption of an eligible child. Under federal tax rules, these must be reasonable and necessary expenses incurred for the principal purpose of completing the adoption. The IRS allows several categories of costs to qualify: adoption fees, attorney fees, court costs, travel expenses including meals and lodging while away from home, and re-adoption expenses for foreign children. However, not all adoption-related costs qualify. You cannot claim expenses that were paid for through state, local, or federal programs, expenses that violate law, costs for surrogate parenting arrangements, expenses for adopting your spouse's child, amounts reimbursed by your employer, or expenses already claimed under another provision of federal tax law. Only expenses meeting these criteria count toward the 2020 adoption credit, which has a maximum value of $14,300 per eligible child.
Qualified adoption expenses are reasonable and necessary expenses directly related to, and for the principal purpose of, the legal adoption of an eligible child.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Adopting your stepchild does not qualify for the credit
Expenses you pay to adopt your spouse's child are not treated as qualified adoption expenses for purposes of the 2020 Adoption Credit. The IRS lists this exclusion alongside several others: amounts already paid for by a state, local, or federal program; expenses that violate law; costs of a surrogate parenting arrangement; reimbursements from an employer or any other source; and amounts claimed as a credit or deduction elsewhere in the tax code. Because the exclusion specifically targets a spouse's child - what is commonly called a stepchild - you cannot claim the 2020 maximum credit of $14,300 against costs associated with adopting that child. The credit itself begins to phase out for taxpayers with modified adjusted gross income above $214,520 and is fully eliminated once income reaches $254,520, but the stepchild rule operates as a threshold eligibility question: regardless of income, these expenses simply do not count. If you have other qualifying adoption expenses - for example, for adopting a child who is not your spouse's - those may still be eligible, subject to the income limits and other rules in the same list of exclusions.
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; • Reimbursed by your employer or otherwise; or • Allowed as a credit or deduction under any other provision of federal income tax law.
2020 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Who decides a child has special needs
For the 2020 Adoption Credit, a child's special-needs status is not decided by the adoptive parents, a doctor, or the IRS. It is determined by a state - including the District of Columbia. A state must make three findings before a child is treated as having special needs: the child must have been a U.S. citizen or resident when the adoption effort began; the state must have determined the child cannot or should not be returned to the parents' home; and the state must have determined 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 minority or sibling group, and any medical condition or physical, mental, or emotional handicap when making that last finding. A child who simply has one of those characteristics is not enough - the state must formally make the special-needs determination before the child is considered to have special needs for purposes of 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.
2020 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. 2019-44 (IRS)
- Maximum credit
under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $14,300
- Phase-out threshold
The available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $214,520
- Fully phased out
under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $214,520 and is completely phased out for taxpayers with modified adjusted gross income of $254,520 or more.