Updated: Jun 14, 2020
For adoptions finalized in 2020, there is a federal adoption tax credit of up to $14,300 per child. The tax credit is NOT refundable, which means taxpayers can only use the credit if they have federal income tax liability.
This credit applies one time for each child who has been adopted and needs to be claimed when taxpayers file taxes for 2020.
But does this apply to stepparent adoptions?
To be eligible for the federal adoption tax credit, the parents must have adopted a child other than a stepchild. This means that all adoptions are eligible for the federal adoption tax credit except stepparent adoptions, unfortunately. So if you have completed an international adoption, a domestic adoption of a newborn, or a foster care adoption, you will be eligible for the federal adoption tax credit so long as you also meet the other requirements.
Why doesn't the federal adoption tax credit apply to stepparent adoptions?
My best guess is that one of the reasons is probably because the stepchild is already living with their biological parent and the stepparent before the stepparent adoption is finalized, and the parents have already been taking care of him/her. Another reason could be that stepparent adoptions do not cost nearly as much as a domestic adoption or an international adoption.
As disappointing as it may seem, this is probably a good thing because it encourages families to open their homes to children who are in desperate need of it.
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