--- title: "Utah Adoption Tax Credit: What You Need to Know" description: Learn about the federal and Utah adoption tax credit, including details on eligibility, qualified expenses, and pending legislation. image: https://blog.cmp.cpa/hubfs/Utah-Adoption-Tax-Credit-Outside-Blog.jpg --- - [Contact Us](https://cmp.cpa/contact-us/) - [Bill Pay](https://cmp.cpa/my-account/) - [File Drop-Off](https://app2.gettruss.io/firm_drop_offs/new?auth_token=MTQyNyZ6OW1HeHh4NWhRbXNIRDF6RmU3OVZXRGJRUkV2aU5ZSGN0OXprNUtH&firm_user_id=3261) - [Client Portal](https://app2.gettruss.io/client_portals/sign_in?client_portal_name=CMP-CPA) [![CMP](https://blog.cmp.cpa/hubfs/Cookmartin-Dec2015/CMP-Logo.png "Cook Martin Poulson, P.C.")](https://cmp.cpa/) - [Home](https://cmp.cpa/) - [About](https://cmp.cpa/company/) - [Meet the Team](https://cmp.cpa/company/meet-the-team/) - [Community](https://cmp.cpa/company/community/) - [CMP Celebrates 40-Years In Business](https://cmp.cpa/company/news/) - [Careers](https://cmp.cpa/company/careers/) - [Reviews & Testimonials](https://cmp.cpa/reviews/) - [Services](https://cmp.cpa/services/) - [Tax Preparation](https://cmp.cpa/services/income-tax-services/) - [Financial Audits & Reviews](https://cmp.cpa/services/financial-statements-audits-and-reviews/) - [Business Valuation](https://cmp.cpa/services/business-valuations/) - [Estate and Succession Planning](https://cmp.cpa/services/estate-succession-planning/) - [ERISA / 401K Audits](https://cmp.cpa/services/erisa-audits/) - [Crypto Tax Accountant](https://cmp.cpa/services/crypto-tax/) - [Federal R&D Tax Credit](https://cmp.cpa/services/rd-tax-credit-services/) - [Utah R&D Tax Credit](https://cmp.cpa/services/utah-rd-tax-credit-services/) - [Bookkeeping and Payroll](https://cmp.cpa/services/bookkeeping-and-payroll-services/) - [Accounting Software Solutions & Consulting](https://cmp.cpa/services/accounting-software-solutions/) - [Retirement Plan Services and TPA](https://cmp.cpa/services/retirement-plan-tpa-services/) - [Cost Segragation Studies](https://cmp.cpa/services/cost-segregation/) - [Outsourced CFO](https://cmp.cpa/services/cfo-outsourced-solutions/) - [Industries](https://cmp.cpa/industries/) - [Farm and Ranch](https://cmp.cpa/industries/farm-ranch-accountant-service/) - [Real Estate and Construction](https://cmp.cpa/industries/real-estate-construction/) - [Retail and Wholesale](https://cmp.cpa/industries/wholesale-and-retail-accounting-services/) - [Nonprofit](https://cmp.cpa/industries/non-profits/) - [Manufacturing](https://cmp.cpa/industries/manufacturing/) - [Healthcare](https://cmp.cpa/industries/healthcare/) - [Technology](https://cmp.cpa/industries/software-technology/) - [Internet Marketing/YouTube](https://cmp.cpa/industries/internet-marketing-youtube/) - [Resources](https://cmp.cpa/resources/) - [Videos](https://cmp.cpa/videos/) - [Tools](https://cmp.cpa/resources/#tools) - [Important Documents](https://cmp.cpa/resources/#import-doc) - [Important Links](https://cmp.cpa/resources/#import-link) - [FAQ](https://cmp.cpa/resources/faqs/) - [Problems We Solve](https://cmp.cpa/problems-we-solve/) - [Blog](https://blog.cmp.cpa/)   Wasatch Front  [801-467-4450](tel:8014674450) |  Cache Valley [435-750-5566](tel:4357505566)[tel:8017428119](tel:8017428119) | Southern Utah  [435-269-4540](tel:4352694540) ![Salt-Lake-City-Utah.jpg](https://blog.cmp.cpa/hs-fs/hubfs/Cookmartin-Dec2015/Salt-Lake-City-Utah.jpg?width=1106&name=Salt-Lake-City-Utah.jpg "Salt-Lake-City-Utah.jpg") # Utah Adoption Tax Credit: What You Need to Know September 06, 2020 By [Richard K. Poulson](https://blog.cmp.cpa/author/richard-k-poulson) Adopting a child is one of the most consequential decisions you will make in your lifetime. It can also be one of the most expensive. Understanding your financial rights and responsibilities before you adopt is the first step in the journey. At CMP, we help clients who adopt children understand their tax obligations. One of the most common questions we hear is this: ### *Is there a Utah adoption tax credit?* There is a special needs adoption tax credit for families adopting in Utah. There is also a federal tax credit for all adoptions. We’ve created this guide to help you understand the federal adoption tax credit and the Utah adoption tax credit and how they both work. ![Utah-Adoption-Tax-Credit-Inside-Blog](https://blog.cmp.cpa/hs-fs/hubfs/Utah-Adoption-Tax-Credit-Inside-Blog.jpg?width=800&name=Utah-Adoption-Tax-Credit-Inside-Blog.jpg) ## **What is the Adoption Tax Credit?** According to the Internal Revenue Service, the [Adoption Tax Credit](https://www.irs.gov/taxtopics/tc607) is a credit designed to offset the qualified adoption expenses paid to adopt an eligible child. Qualified adoption expenses include: - Reasonable and necessary adoption fees - Adoption-related court costs and attorney fees - Travel expenses, including expenses for lodging and meals, while away from home - Other expenses that are related to, and for the principal purpose of, adopting a child The IRS clarifies that qualified adoption expenses may also include expenses incurred before an eligible child has been found or identified. In other words, if you begin the adoption process and pay an agency fee or an attorney fee before finding a child to adopt, those expenses are still eligible for the credit. There can be tax implications when moving out of state temporarily. You may also want to read [Tips for Changing Your Tax Residence in Utah](https://blog.cmp.cpa/tips-for-changing-tax-residence-in-utah). ![Utah-Adoption-Tax-Credit](https://blog.cmp.cpa/hs-fs/hubfs/Utah-Adoption-Tax-Credit.jpg?width=800&name=Utah-Adoption-Tax-Credit.jpg) ## **How Does the Adoption Tax Credit Work?** The Adoption Tax Credit works like most other [tax credits](https://blog.cmp.cpa/tax-credit-vs-deduction). You may deduct the credit on your federal tax return. The credit can be carried over for up to five years if necessary. In other words, if you incur expenses related to the same adoption over two years, you may take part of the credit in the first year and the other part in the second. You must carry over the credit if taking a portion of the credit reduces your taxes to zero because the adoption tax credit is classified as non-refundable. The maximum adoption tax credit allowable in 2022 is $14,890. The credit phases out at [higher income levels](https://blog.cmp.cpa/reduce-taxable-income-high-earners), beginning at $223,410 and phasing out completely at $263,410. You should also know that if your employer offers reimbursement for adoption expenses, you may exclude the amount reimbursed from your taxable income. However, you may not include reimbursed expenses when calculating eligible Adoption Tax Credit expenses. In other words, if you paid $14,080 in total expenses and your employer reimbursed you for $5,000, you would deduct the $5,000 from your eligible expenses and reduce the credit amount to $9,080. ## **Does Utah Offer a State Adoption Tax Credit?** Currently, the state of Utah offers a $1,000 tax credit for families who adopt a child with special needs. The maximum credit is $1,000 per tax year even if more than one child with special needs is adopted. You can find information about the existing tax credit on page 27 of [this document](https://tax.utah.gov/forms/current/tc-40inst.pdf). ## **Who Qualifies for the Adoption Tax Credit?** The full federal adoption tax credit is available to any family earning less than $214,300 and partially available to any family earning less than $254,520 but greater than $214,300. As a reminder, the current maximum federal tax credit allowable is $14,300. It is important to note that families adopting children with special needs may take full credit regardless of income. The adoption tax credit is nonrefundable. That means that if taking the full credit would result in a negative tax burden and a refund, you will need to spread the credit out over the next five years. You should also know that if you incur expenses for an adoption that isn’t successful, those expenses are eligible for the credit. However, if you then have a successful adoption, you must aggregate the expenses for the credit. If you spent $4,000 on an adoption that fell through and $12,000 on a successful adoption, you would need to deduct the $4,000 (if you took it as a credit in a previous year) from your credit for the successful adoption. ## **How to Claim the Adoption Tax Credit** Claiming the federal adoption tax credit requires the following: - Completion of Form 8839 - Attaching Form 8829 to Form 1040, 1040-SR, or 1040—NR. Make sure to report any employer adoption assistance you received. Remember, you may not include reimbursed expenses in calculating the Adoption Tax Credit. For the Utah adoption tax credit for special needs adoptions, there is no required form. You may take the credit on your state tax return when you file your taxes. ## **When Can I Claim the Adoption Tax Credit?** You can claim the Adoption Tax Credit in any year when you incur qualified adoption expenses. The most important thing to remember is that neither the federal adoption tax credit nor the Utah adoption tax credit is refundable. If you incur some adoption expenses in one year and finalize the adoption in the following year, you may take part of the credit in the first year and the remainder in the second. You may not take the full credit if it would lead to a refund, but you may carry over the credit for up to five years. The child tax credit has been changing. If you are adopting a child, you will want to know how the child tax credit impacts you. Check out this blog post: [Everything You Need to Know About the Child Tax Credit](https://blog.cmp.cpa/child-tax-credit). ## **What is the Current Status of the Adoption Tax Credit?** The maximum [credit allowable](https://www.adopthelp.com/the-2022-federal-adoption-tax-credit/) for 2022 is $14,890, and the credit may be taken all in one year or spread out for up to five years. It is a non-refundable credit. The Utah adoption tax credit is available only to those adopting a child with special needs. Currently stands at a maximum of $1,000 for families making up to $160,000 per year (again, for those who adopt a child with special needs). ## **Adoption Tax Credit FAQ** Let us answer a few more questions regarding the Adoption Tax Credit. ### **What are the qualified adoption expenses?** Qualified adoption expenses are any expenses related to the adoption of an eligible child. For the federal tax credit, eligibility is broad and includes most adoptions. The only exclusions are the adoption of step-children and families making more than the maximum income allowance. Qualified expenses include adoption fees, legal fees, court fees, food, lodging, and any other expenses related directly to the adoption. ### **What is the maximum credit amount?** The maximum credit amount is $14,890 per child for 2022. In Utah, the existing credit is $1,000 and *applies only to families adopting a child with special needs*. The federal credit is a per-child credit, and the Utah credit is a per-year maximum regardless of how many children you adopt. ### **What if I adopt my partner’s child, but we are not married?** If you adopt the child of a partner who is not your spouse, you are eligible for the federal adoption tax credit. You may be eligible for the Utah adoption tax credit if the child you adopt has special needs. ### **Is the tax credit for all adoptions or just special needs?** The federal adoption tax credit is for all adoptions except for the adoption of a step-child. The existing Utah adoption tax credit is only for children with special needs. ### **Is there a limit to the number of credits I can claim if I adopted multiple children?** On the federal level, the only limitation is that you may not get a refund because you took the tax credit. As we stated above, you may spread the tax credit out over five years. You may take up to the full credit for any eligible child you adopt. The Utah adoption tax credit, as it stands, is far more restrictive. It applies only to special needs adoptions, and your maximum annual credit is $1,000. ## Conclusion Taking the federal and Utah adoption tax credits can help to offset the expenses of adopting a child and reduce your tax burden. Not sure if you’re eligible for the adoption tax credit? A CMP [professional CPA](https://cmp.cpa) has experience in preparing adoption tax credit claims to assist you. *This content is for educational purposes only and may not apply to your specific tax situation. Tax laws are complex, subject to change, and depend on individual circumstances. Consult a qualified tax advisor before relying on this information.* [![Richard K. Poulson](https://blog.cmp.cpa/hs-fs/hubfs/Blog_Author/richard-poulson.jpg?width=160&height=190&name=richard-poulson.jpg)](https://cmp.cpa/team/richard-k-poulson/) About Richard K. Poulson Rich is the kind of man everyone likes to have around. He is totally committed to whatever he is doing, whether it is working on a client’s estate plan, business valuations, or vacationing with his family. His goal is to help you add value to your business. You can feel comfortable with the outcome of any project if Rich is involved. You know he will be honest, give the project the time it deserves, and you’ll always get the best he has to offer. 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For the federal tax credit, eligibility is broad and includes most adoptions. The only exclusions are the adoption of step-children and families making more than the maximum income allowance. As a reminder, the maximum income allowance does not apply to families adopting children with special needs. Qualified expenses include adoption fees, legal fees, court fees, food, lodging, and any other expenses related directly to the adoption." }, "name" : "What are the qualified adoption expenses?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The maximum credit amount is $14,080 per child as of 2019 and $14,300 as of 2020. In Utah, the existing credit is $1,000 and applies only to families adopting a child with special needs. The federal credit is a per-child credit and the Utah credit is a per-year maximum regardless of how many children you adopt." }, "name" : "What is the maximum credit amount?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "If you adopt the child of a partner who is not your spouse, you are eligible for the federal adoption tax credit. You may be eligible for the Utah adoption tax credit if the child you adopt has special needs." }, "name" : "What if I adopt my partner’s child but we are not married?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The federal adoption tax credit is for all adoptions except for the adoption of a step-child. The existing Utah adoption tax credit is only for children with special needs. However, if the pending legislation is passed, the credit will apply to most adoptions provided the parents meet the income requirements." }, "name" : "Is the tax credit for all adoptions or just special needs?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "On the federal level, the only limitation is that you may not get a refund because you took the tax credit. As we stated above, you may spread the tax credit out over five years. You may take up to the full credit for any eligible child you adopt. The Utah adoption tax credit as it stands is far more restrictive. It applies only to special needs adoptions and your maximum annual credit is $1,000. If the pending legislation is passed, eligible families may be able to claim the credit for more than one child." }, "name" : "Is there a limit to the number of credits I can claim if I adopted multiple children?" } ] } ``` ```json { "@context" : "https://schema.org", "@id" : "https://blog.cmp.cpa/utah-adoption-tax-credit#blogposting", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Richard K. Poulson", "url" : "https://blog.cmp.cpa/author/richard-k-poulson" }, "dateModified" : "2020-09-06", "datePublished" : "2020-09-06", "description" : "Adopting a child can be one of the most consequential decisions you’ll make—and one of the most expensive. This guide explains the federal adoption tax credit and the Utah adoption tax credit, including how they work, who qualifies, and what expenses may be eligible.", "hasPart" : [ { "@id" : "https://blog.cmp.cpa/utah-adoption-tax-credit#faq" } ], "headline" : "Utah Adoption Tax Credit: What You Need to Know", "image" : { "@type" : "ImageObject", "height" : 1000, "url" : "https://blog.cmp.cpa/hs-fs/hubfs/Utah-Adoption-Tax-Credit-Inside-Blog.jpg?width=2000&height=1000&name=Utah-Adoption-Tax-Credit-Inside-Blog.jpg", "width" : 2000 }, "inLanguage" : "en", "mainEntityOfPage" : { "@id" : "https://blog.cmp.cpa/utah-adoption-tax-credit", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "height" : 86, "url" : "https://cmp.cpa/wp-content/uploads/CMP-Logo.png", "width" : 406 }, "name" : "CMP" } } ``` ```json { "@context" : "https://schema.org", "@id" : "https://blog.cmp.cpa/utah-adoption-tax-credit#faq", "@type" : "FAQPage", "mainEntity" : [ { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Yes. Utah offers a special needs adoption tax credit for families adopting in Utah. There is also a federal tax credit for all adoptions." }, "name" : "Is there a Utah adoption tax credit?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The Adoption Tax Credit is a federal tax credit designed to offset qualified adoption expenses paid to adopt an eligible child. Qualified expenses can include adoption fees, court and attorney fees, travel (including lodging and meals), and other adoption-related expenses." }, "name" : "What is the Adoption Tax Credit?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The adoption tax credit is claimed on your federal tax return based on qualified adoption expenses. It is nonrefundable, and it can generally be carried over for up to five years if you can’t use the full credit in one year." }, "name" : "How Does the Adoption Tax Credit Work?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Yes. Utah offers a state adoption tax credit for families who adopt a child with special needs, subject to the limits described in the post." }, "name" : "Does Utah Offer a State Adoption Tax Credit?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Qualification depends on the federal adoption tax credit rules (including income limits and eligibility rules) and Utah’s special needs adoption tax credit requirements. Families adopting children with special needs may qualify differently under federal rules, as described in the post." }, "name" : "Who Qualifies for the Adoption Tax Credit?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "You can claim the adoption tax credit in any year when you incur qualified adoption expenses, following the timing and carryforward rules described in the post." }, "name" : "When Can I Claim the Adoption Tax Credit?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The post outlines the then-current maximum federal adoption credit amount for the referenced year, explains that the credit is nonrefundable (with carryforward rules), and summarizes the Utah special needs adoption tax credit and its limitations." }, "name" : "What is the Current Status of the Adoption Tax Credit?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Qualified adoption expenses generally include adoption fees, legal and court fees, travel expenses (including lodging and meals), and other expenses directly related to adopting an eligible child, as described in the post." }, "name" : "What are the qualified adoption expenses?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The post provides the maximum federal adoption tax credit amount for the referenced year, and explains that Utah’s credit is a separate maximum for special needs adoptions, with an annual cap regardless of the number of eligible children adopted." }, "name" : "What is the maximum credit amount?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "If you adopt the child of a partner who is not your spouse, you may be eligible for the federal adoption tax credit. You may also be eligible for the Utah adoption tax credit if the child you adopt has special needs." }, "name" : "What if I adopt my partner’s child, but we are not married?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The federal adoption tax credit applies to eligible adoptions (with exclusions described in the post), while the Utah adoption tax credit applies only to special needs adoptions." }, "name" : "Is the tax credit for all adoptions or just special needs?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "On the federal level, the credit is limited by nonrefundable and carryforward rules and is generally applied per eligible child. Utah’s special needs adoption credit is more restrictive and is capped annually, regardless of how many special needs children are adopted." }, "name" : "Is there a limit to the number of credits I can claim if I adopted multiple children?" } ] } ```