Adoption Credit Calculator

Formula

The formula to calculate the Adoption Credit (AC) is:

\[ AC = (E \times r) - (I \times t) \]

Where:

$ E $ is the total eligible adoption expenses ($).
$ r $ is the credit rate (decimal).
$ I $ is the taxpayer’s modified adjusted gross income ($).
$ t $ is the tax rate (decimal).

Example

Let's say the total eligible adoption expenses ($ E $) are $15,000, the credit rate ($ r $) is 0.10, the modified adjusted gross income ($ I $) is $80,000, and the tax rate ($ t $) is 0.25. Using the formula:

\[ AC = (15,000 \times 0.10) - (80,000 \times 0.25) \]

We get:

\[ AC = 1,500 - 20,000 = -18,500 \]

So, the Adoption Credit ($ AC $) would be -$18,500, indicating that the taxpayer's income and tax rate significantly reduce the credit.

What is an Adoption Credit?

The Adoption Credit is a non-refundable tax credit offered by the U.S. federal government to help offset the costs of adoption. It is designed to help families cover expenses such as adoption fees, court costs, attorney fees, traveling expenses, and other direct costs associated with legal adoption. The amount of the credit may vary each year and is subject to income limitations, which could reduce or eliminate the amount for some families.