Form 8839 (2020)—Qualified Adoption Expenses Checklist
Purpose
Form 8839 allows taxpayers to claim the adoption credit or exclude employer-provided adoption benefits. For 2020, the maximum credit and exclusion per child is $14,300.
Special rules apply to children with special needs whose adoptions became final in 2020, and carry-forward credits from 2019 must be verified using the prior-year worksheet.
Filing Steps
Step 1: Complete Part I for Each Eligible Child
Enter the required information for each child: name, year of birth, and whether the adoption became final in 2020 or earlier. Check the appropriate boxes to indicate if the child was born before 2003 and disabled, has special needs status, or is foreign-born.
These designations apply to all adoptions reported in 2020, not just those finalized in that year. A disabled individual is an eligible child regardless of age at adoption.
Step 2: Verify Prior-Year Credit Carryforward
Determine if you claimed Form 8839 for the same child in a prior tax year. If yes, retrieve the amount from line 3 of your prior-year form or the Adoption Credit Carryforward Worksheet in the 2019 Form 8839 instructions and enter it on line 3 of Part II.
Do not estimate or recalculate this amount.
Step 3: Enter the Maximum Adoption Credit
Enter $14,300 as the 2020 maximum adoption credit per child on line 2, Part II. This threshold is specific to 2020 and differs from prior years.
Do not use amounts from 2019 or earlier returns.
Step 4: Report Qualified Adoption Expenses
Report qualified adoption expenses on line 5 of Part II. Include only costs paid in 2020 or earlier years that were not reimbursed by your employer or otherwise.
For domestic adoptions that became final in 2020 or earlier, expenses paid after the finalization year are claimed in the year of payment. Expenses paid in 2021 would be claimed on your 2021 Form 8839.
Step 5: Calculate Modified Adjusted Gross Income
Calculate modified adjusted gross income (MAGI) for line 7 using the 2020 worksheet in the instructions. Compare MAGI to the 2020 phase-out threshold of $214,520.
If MAGI exceeds this amount, complete lines 8 through 10. If not, enter zero on line 10 and proceed to line 11.
Step 6: Complete Part III for Employer-Provided Benefits
Complete Part III if you received employer-provided adoption benefits in 2020, shown in box 12 of Form W-2 with code T.
Enter $14,300 as the 2020 maximum exclusion per child on line 17. Use the same $214,520 MAGI threshold and $40,000 phase-out increment for lines 24–25.
Step 7: Apply Special Needs Adoption Rule
If the child had special needs status and the adoption became final in 2020, follow the special rule on line 22, Part III: enter the full amount from line 19 regardless of actual employer benefits received.
This rule applies only to adoptions finalized in 2020 and differs from the general rule.
Step 8: Determine Taxable or Excluded Benefits
Complete line 29 to determine if you have taxable benefits or a wage reduction. If line 28 is less than line 21, you have taxable benefits.
If line 28 exceeds line 21, you have a negative adjustment that reduces your wages. The code you use depends on this calculation, not on your choice.
Step 9: Mark Form 1040 with Appropriate Code
If line 29 shows taxable benefits (positive amount), include this amount on Form 1040 or 1040-SR line 1, or Form 1040-NR line 1a, and enter “AB” on the dotted line.
If line 29 shows a negative amount, reduce your wages by this amount and enter “SNE” on the dotted line. These codes are not interchangeable—use the code that corresponds to your specific situation.
Step 10: Attach Form 8839 and Report Credit
Attach the completed Form 8839 to Form 1040, 1040-SR, or 1040-NR. Enter the final adoption credit from line 16 on Schedule 3 (Form 1040), line 6, and check box c with code “8839” in the adjoining space.
2020 Year-Specific Information
Maximum Amounts
The maximum adoption credit and employer-benefit exclusion per child for 2020 is $14,300. This amount is fixed for 2020 and is not indexed to inflation.
Phase-Out Thresholds
The phase-out threshold for both Part II and Part III begins when MAGI exceeds $214,520. The credit and exclusion are reduced using a $40,000 phase-out range and are eliminated at an income of $254,520 or more.
This threshold differs from 2019.
Special Needs Adoption Benefit
If an adoption of a U.S. child with special needs becomes final in 2020, the full excluded benefit amount from line 19, Part III, is allowed, regardless of the Box 12 W-2 benefits reported.
This provides relief for timing mismatches between when benefits were received and when the adoption was finalized.
Carryforward Documentation
Prior-year credit carryforwards must be documented using the 2019 Form 8839 Adoption Credit Carryforward Worksheet.
Do not carry forward amounts not shown on that worksheet.
Foreign Child Adoption Rules
Special timing rules apply to foreign adoptions of children. Generally, you cannot claim the adoption credit or exclusion unless the adoption is finalized.
The year of finality may be determined under either the non-Hague adoption rules or Hague adoption rules, depending on the country. Qualified expenses paid in 2020 and all prior years may be used when the adoption becomes final in 2020.
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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.
