Adopting a child is a joyful—and often expensive—journey. The IRS offers significant financial help through the adoption tax credit, which you claim using Form 8839. This guide walks you through everything you need to know about this valuable tax benefit for the 2023 tax year.

What Form 8839 Is For

Form 8839 serves two important purposes for adoptive families. First, it calculates your adoption tax credit—a dollar-for-dollar reduction in the federal income tax you owe. Second, it helps you exclude employer-provided adoption benefits from your taxable income. The good news? You can claim both benefits for the same adoption, as long as you don't double-dip on the same expenses. IRS.gov

For 2023, the maximum credit is $15,950 per eligible child. You can also exclude up to $15,950 in employer adoption assistance from your income. Depending on your adoption costs, you might be able to claim the full $15,950 credit and exclude another $15,950 from your income—potentially providing up to $31,900 in tax benefits for one adoption. IRS.gov

Qualified adoption expenses include reasonable and necessary costs directly related to legally adopting an eligible child under age 18 (or a disabled person of any age). This covers adoption agency fees, court costs, attorney fees, travel expenses including meals and lodging, and re-adoption expenses for foreign children. However, expenses paid with federal, state, or local program funds, expenses that violate laws, surrogate parenting costs, and adopting your spouse's child don't qualify. IRS.gov

When You’d Use Form 8839 (Late/Amended Filing)

If you missed claiming the adoption credit on your original 2023 tax return, don't worry—you can file an amended return using Form 1040-X to claim it retroactively. This is common when families complete an adoption late in the year and file their taxes before organizing all the adoption documentation.

You should also file Form 8839 if you're claiming a carryforward from a previous year. The adoption credit is non-refundable, meaning it can only reduce your tax liability to zero—not generate a refund. However, any unused credit can be carried forward for up to five years. For example, if you claimed $15,950 in 2022 but only owed $5,000 in taxes, the remaining $10,950 carries forward to 2023 and beyond. IRS.gov

Additionally, if you're adopting a foreign child and received employer benefits in years before the adoption finalized, you must include those benefits in your income for the year received, then claim the exclusion in the year the adoption becomes final using Form 8839.

Key Rules or Details for 2023

Understanding the rules helps you maximize your benefit and avoid delays:

Income Limits

• $239,230 or less: Full credit available
• $239,231 to $279,229: Partial credit (gradually reduced)
• $279,230 or more: No credit available IRS.gov

Timing Differences for Domestic vs. Foreign Adoptions

• U.S. children: You can claim the credit for expenses paid in the year after you paid them, even if the adoption never finalizes. This means 2022 expenses are claimed on your 2023 return if the adoption wasn't final by the end of 2022.
• Foreign children: You must wait until the adoption becomes final to claim any credit, but then you can claim all qualifying expenses paid in all years at once. IRS.gov

Special Needs Adoption

If you adopted a U.S. child with special needs (as determined by your state) and the adoption finalized in 2023, you can claim the full $15,950 credit even if you paid zero expenses. This special provision recognizes the challenges of adopting children with special needs. IRS.gov

Filing Status Requirements

Generally, you must file jointly if married. However, you may claim the credit as married filing separately if you lived apart from your spouse for the last six months of 2023, the child lived with you more than half the year, and you provided more than half the household costs.

Child Identification

You need a Social Security Number (SSN), Adoption Taxpayer Identification Number (ATIN), or Individual Taxpayer Identification Number (ITIN) for the child to claim the credit.

Step-by-Step (High Level)

Here's how to complete Form 8839:

Step 1: Gather Documentation

Collect receipts for all adoption-related expenses: agency fees, attorney bills, court costs, travel receipts, and any employer adoption assistance statements (Box 12 of your W-2 with code "T").

Step 2: Complete Part I

List information about each eligible child you adopted or attempted to adopt. Include the child's name, birth year, identifying number (SSN/ATIN/ITIN), whether they have special needs, whether they're a foreign child, and whether the adoption finalized.

Step 3: Complete Part III First (If You Have Employer Benefits)

If your employer provided adoption benefits, calculate your exclusion in Part III before moving to Part II. This prevents accidentally claiming both the credit and exclusion for the same expenses.

Step 4: Complete Part II to Calculate Your Credit

Enter the maximum credit amount ($15,950 per child), subtract any credit claimed in prior years for the same child, and enter your qualified expenses. Calculate your MAGI and apply the income phase-out if applicable. Then use the credit limit worksheet to determine how much credit you can use this year based on your actual tax liability.

Step 5: Report Any Carryforward

If you have unused credit, it carries forward automatically to future years. Keep your Form 8839 records to track these carryforward amounts.

Step 6: Attach to Your Tax Return

Attach the completed Form 8839 to Form 1040, 1040-SR, or 1040-NR. Enter the allowable credit on Schedule 3, line 6c. IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Double-Counting Expenses

Many families accidentally claim expenses that their employer already reimbursed. If your employer paid $5,000 of expenses, those $5,000 do not count toward your credit—but you can exclude them from income. Only unreimbursed expenses qualify for the credit.

Mistake #2: Wrong Timing for Foreign Adoptions

Families adopting internationally often claim the credit too early. Remember: for foreign adoptions, you must wait until the adoption is final, even if you paid expenses in earlier years.

Mistake #3: Missing Special Needs Documentation

To claim the full credit for a special needs adoption without expenses, you must have written documentation from your state determining the child has special needs. Keep this documentation with your tax records—the IRS may request it. IRS.gov

Mistake #4: Combining Multiple Adoption Attempts

If you attempted to adopt one U.S. child multiple times (unsuccessfully, then successfully), combine all those expenses on one line of Form 8839. Don't list each attempt separately—they count as one adoption effort.

Mistake #5: Forgetting to Carry Forward Unused Credit

Since the credit is non-refundable, you often can't use it all in one year. Many families forget to carry forward the unused portion. Keep your Form 8839 from year to year to track carryforward amounts.

Mistake #6: Incorrect MAGI Calculation

Your Modified Adjusted Gross Income determines whether your credit is reduced. Don't forget to add back certain items like foreign income exclusions when calculating MAGI per the form instructions.

What Happens After You File

Once you file Form 8839 with your tax return:

Processing Time

Returns claiming the adoption credit are processed like most other returns—typically within 21 days for e-filed returns with direct deposit. However, adoption credit returns sometimes receive additional IRS review, which can extend processing time. IRS.gov

Credit Application

The adoption credit is non-refundable, meaning it reduces your tax liability but won't generate a refund beyond what you already paid in. For example, if you owe $10,000 in taxes and claim a $15,950 credit, your tax bill drops to zero—but you won't receive a $5,950 refund. That remaining $5,950 carries forward to next year.

Carryforward Tracking

Any unused credit automatically carries forward for up to five years. You'll report it on line 4 of Form 8839 in future years. No special application is needed—just file Form 8839 each year until the credit is exhausted or five years pass.

Documentation Requirements

Keep all adoption-related receipts, court documents, and agency correspondence for at least three years after filing. The IRS may request documentation to verify your claimed expenses. Notice 2010-66 provides examples of helpful documentation to maintain. IRS.gov

Amended Returns

If you discover you claimed the wrong amount, file Form 1040-X to amend your return. You can check the status of an amended return about three weeks after submitting it.

FAQs

Q1: Can I claim the adoption credit for a failed adoption attempt?

Yes, for U.S. children. If you paid qualified expenses attempting to adopt a U.S. child and the adoption fell through, those expenses still qualify. You claim them in the year after you paid them. However, they count toward the $15,950 lifetime limit per child (even if you never adopted that specific child). Failed international adoptions don't qualify unless the adoption eventually finalizes. IRS.gov

Q2: What if I adopted my spouse's child from their previous relationship?

Unfortunately, you cannot claim the adoption credit for adopting your spouse's child, even if you incurred legitimate expenses. This is a specific IRS exclusion. IRS.gov

Q3: Do home study fees qualify before I've identified a specific child?

Yes! Expenses paid at the beginning of the adoption process—like home study fees—qualify as adoption expenses even if you haven't yet been matched with a child. These early expenses count toward your credit when the adoption eventually occurs. IRS.gov

Q4: Can same-sex couples or unmarried partners claim the credit?

Yes. In states allowing second-parent or co-parent adoption, a registered domestic partner who pays adoption expenses may claim the credit. Each person who pays expenses for adopting the same child must divide the $15,950 maximum—you can split it any way you mutually agree. IRS.gov

Q5: What's the difference between Hague and non-Hague adoptions?

This affects when your foreign adoption is considered "final" for tax purposes. Hague adoptions (from countries party to the Hague Adoption Convention since April 1, 2008) follow Rev. Proc. 2010-31. Non-Hague adoptions follow Rev. Proc. 2005-31. Generally, you can choose either the year of the foreign decree or the year of U.S. re-adoption as your finalization year, which affects when you claim the credit. IRS.gov

Q6: My employer gave me $12,000 for adoption expenses, and I spent $20,000. How does this work?

You can exclude the $12,000 employer benefit from your income (tax-free money), and claim the remaining $8,000 ($20,000 - $12,000) toward your adoption credit. You cannot claim the credit and the exclusion for the same dollar—no double-dipping. IRS.gov

Q7: How long can I carry forward unused adoption credit?

You can carry forward unused credit for up to five years. If you finalized an adoption in 2023 and couldn't use all the credit, you can apply the remainder to your 2024, 2025, 2026, 2027, and 2028 tax returns. After five years, any remaining unused credit expires. IRS.gov

For more information: Visit the official IRS Adoption Credit page at IRS.gov/credits-deductions/individuals/adoption-credit or download Form 8839 and instructions at IRS.gov/forms-pubs/about-form-8839.