The adoption tax credit is a way for families to afford the cost of adoption by utilizing the adoption tax credit to offset adoption costs. There are numerous costs and fees associated with adopting a child, but not all are considered qualified adoption expenses.
Qualified adoption expenses are fees that were paid out of pocket that were necessary to complete an adoption. Qualified adoption expenses include: court costs, attorney fees, traveling expenses, meals and lodging while away from home, adoption home study, and other expenses associated with adopting a child.
Other expenses that do not count as qualified adoption expenses include fees associated with adopting a step-child or a surrogate parent arrangement.
If adopting internationally, these fees are also considered qualified adoption expenses if the adoptive parents finalize the adoption of the child.
To figure your qualified adoption expenses, add up the costs associated with adopting your child and then subtract the amounts that were reimbursed or covered by your employer, state or federal funds, or other organizations. What is left are your qualified adoption expenses.