Adoption Tax Credit

§ 23. Adoption expenses(a) Allowance of credit(1) In generalIn the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer. (2) Year credit allowedThe credit under paragraph (1) with respect to any expense shall be allowed—(A) in the case of any expense paid or incurred before the taxable year in which such adoption becomes final, for the taxable year following the taxable year during which such expense is paid or incurred, and (B) in the case of an expense paid or incurred during or after the taxable year in which such adoption becomes final, for the taxable year in which such expense is paid or incurred. (3) $10,000 credit for adoption of child with special needs regardless of expensesIn the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years. (4) Portion of credit refundableSo much of the credit allowed under paragraph (1) as does not exceed $5,000 shall be treated as a credit allowed under subpart C and not as a credit allowed under this subpart. (b) Limitations(1) Dollar limitationThe aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000. (2) Income limitation(A) In generalThe amount allowable as a credit under subsection (a) for any taxable year (determined without regard to subsection (c)) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph but with regard to paragraph (1)) as—(i) the amount (if any) by which the taxpayer’s adjusted gross income exceeds $150,000, bears to (ii) $40,000. (B) Determination of adjusted gross incomeFor purposes of subparagraph (A), adjusted gross income shall be determined without regard to sections 911, 931, and 933. (3) Denial of double benefit(A) In generalNo credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter. (B) GrantsNo credit shall be allowed under subsection (a) for any expense to the extent that funds for such expense are received under any Federal, State, or local program.