Form 8839 (2018) Qualified Adoption Expenses Checklist
Purpose
Form 8839 allows you to claim the federal adoption credit and exclude employer-provided adoption benefits from income for the 2018 tax year. The maximum credit and exclusion are each $13,810 per eligible child. These amounts begin to phase out if your modified adjusted gross income (MAGI) exceeds $207,140 and are eliminated at $247,140 or more.
Completion Steps
Step 1: Complete Part I for Each Eligible Child
Enter information in columns (a) through (g) of line 1 for each child you adopted or attempted to adopt in 2018, or for whom you are claiming a carry-forward from 2017. An eligible child is any child under age 18 or any disabled individual physically or mentally unable to care for themselves, regardless of age.
Check the appropriate boxes to indicate if the child has special needs status or is a foreign child. These designations affect timing rules and maximum credit amounts. For special needs, all three conditions must be met: the child must be a U.S. citizen or resident at the time adoption efforts began, a state must have determined that the child cannot return to the parents’ home, and the state must have determined that the child will not be adopted without assistance.
Step 2: Determine the Maximum Credit Per Child
Enter $13,810 on line 2 for each child. This is the statutory maximum for 2018. If you and another person (other than your spouse if filing jointly) adopted the same child, you must divide this amount between you in any manner you both agree upon.
Step 3: Account for Prior-Year Claims
On line 3, enter any adoption credit you claimed in 2017 or earlier years for the same child. If this is your first year of claiming this child, enter zero. This prevents duplicate claims and is required for proper carry-forward tracking.
Step 4: Calculate Remaining Available Credit
Subtract line 3 from line 2 and enter the result on line 4. This represents the maximum credit still available for this child after accounting for all prior-year claims.
Step 5: Enter Qualified Adoption Expenses
On line 5, enter only expenses paid in 2018 that qualify under the IRS definition. Qualified expenses include adoption fees, attorney fees, court costs, travel expenses while away from home, and re-adoption expenses for foreign children. Do not include expenses reimbursed by your employer or paid in prior tax years.
For special needs adoptions that became final in 2018, enter $13,810 minus any adoption credit claimed for this child in prior years, even if you paid no expenses. For unsuccessful U.S. child adoption attempts, treat costs the same as those for adoptions not yet finalized.
Step 6: Calculate the Smaller Amount
Enter the smaller amount from line 4 or line 5 and record it on line 6. Your qualified adoption expenses may not equal the fees you actually paid in 2018 due to timing rules.
Step 7: Determine Your Modified Adjusted Gross Income
Calculate and enter your MAGI on line 7 using the worksheet provided in the instructions. Your MAGI determines whether your credit will be reduced or eliminated.
Step 8: Apply the Phase-Out Calculation if Necessary
If line 7 exceeds $207,140, complete the phase-out calculation on lines 8 through 10. Subtract $207,140 from line 7 and enter on line 8. Divide line 8 by $40,000 and enter the result on line 9 as a decimal rounded to at least three places. Multiply each amount on line 6 by line 9 and enter on line 10. If line 7 is $207,140 or less, skip lines 8 and 9 and enter zero on line 10.
Step 9: Calculate Net Credit Per Child
Subtract line 10 from line 6 and enter on line 11. Add the amounts on line 11 for all children and enter the total on line 12.
Step 10: Include Prior-Year Carryforward
On line 13, enter any credit carryforward from prior years using your Adoption Credit Carryforward Worksheet from the 2017 Form 8839 instructions. Add lines 12 and 13 and enter the total on line 14.
Step 11: Determine Credit Limit
Complete the Credit Limit Worksheet in the instructions to calculate your tax liability limitation. Enter this amount on line 15. This worksheet reflects the tax law changes under the Tax Cuts and Jobs Act.
Step 12: Claim the Credit or Carryforward
Enter the smaller of line 14 or line 15 on line 16. Report this amount on Schedule 3 (Form 1040), line 54, or Form 1040NR, line 51. Check box c on that line and enter “8839” in the space next to it. If line 14 exceeds line 15, you may carry forward the unused credit for up to five years.
Step 13: Complete Part III for Employer-Provided Benefits.
Suppose you received employer-provided adoption benefits shown in box 12 of your 2018 Form W-2 with code T, complete Part III. Enter $13,810 on line 17 as the maximum exclusion per child, subject to the same division rules as the credit if two people adopted the same child.
Step 14: Calculate Excludable Benefits
On line 18, enter any employer-provided benefits received in prior years for the same child, or enter zero if this is the first year. Subtract line 18 from line 17 and enter on line 19. Enter benefits received in 2018 on line 20 and total them on line 21.
On line 22, enter the smaller of line 19 or line 20. However, if the child had special needs and the adoption became final in 2018, enter the full amount from line 19, even if you received no employer benefits.
Step 15: Apply Phase-Out to Benefits
Enter your MAGI on line 23 using the same calculation as line 7. If line 23 exceeds $207,140, complete lines 24 through 26 using the same phase-out method as in Part II. Subtract line 26 from line 22 and enter excluded benefits on line 27. Add amounts on line 27 and enter the total on line 28.
Compare line 28 to line 21. If line 28 is less than or equal to line 21, subtract line 28 from line 21 and enter the result on line 29. If more than zero, include this amount on Form 1040, line 1, or Form 1040NR, line 8, and enter “AB” on the dotted line. If line 28 exceeds line 21, you may have excluded prior-year benefits for a foreign child adoption that became final in 2018.
Important 2018 Considerations
Timing Rules for U.S. Children: You can claim the credit even if the adoption was never finalized. Take the credit in the year after you pay expenses if the adoption is not yet final in the year of payment, or in the year of payment if the adoption becomes final that year, or in the year expenses were paid after finalization.
Timing Rules for Foreign Children: You cannot claim the credit until the adoption is finalized. All expenses paid before and during the year of finalization are claimed in the year the adoption becomes final. The adoption is final when it meets requirements under Rev. Proc. 2005-31 for non-Hague adoptions or Rev. Proc. 2010-31 for Hague Convention adoptions.
Carryforward Rules: Any unused credit can be carried forward for up to five years. Track carryforwards using the Adoption Credit Carryforward Worksheet, as credits from 2013 forward may still be available in 2018.
Special Needs Exception: For U.S. children with special needs whose adoptions became final in 2018, you may claim the full $13,810 credit and exclusion even if you paid no qualified expenses. The state must have made an official determination of special needs before the adoption was finalized.
Form Requirements: Form 8839 must be attached to Form 1040 or Form 1040NR. You cannot use Form 1040A or Form 1040EZ. If you are married, you generally must file jointly to claim the credit unless you meet specific exceptions for living apart from your spouse.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
