1. Any expenses which may be a violation of Federal Law
2. incurred in surrogate parenting arrangements
3. incurred while adopting a spouse’s child
4. Paid using Federal, State or local program funds
5. Claimed as a deduction or credit elsewhere on the tax return

Example:
In 2012 Jim and Kelly, who live in Georgia, adopt a child born in California:

Expenses incurred:

• $7,420 in fees to the adoption agency
• $600 in kennel fee’s for the birth mother’s dog while she was in the hospital
• $765 in court and attorney’s fees
• $1,100 in supplies for the new baby (i.e. baby clothes, crib, safety supplies, etc..)
• $1,440 in travel expenses, including airfare, rental car, hotels and meals to pick up the child

Total deductible expenses:

  $7,420
       765
+  1,440
  $9,625

Total Non Deductible Expenses:

     $600
+  1,100
  $1,700

These deductible expenses would be applied to the 2012 tax year as long as the adoption was finalized in 2012.

If you have specific questions about the adoption tax credit or adoption please give us a call. The partners in our office have adopted a total of six children, we have been in your shoes let us help.