Adopting a child can be both complicated and expensive, costing upwards of $40,000. However, with the help of the government, you can obtain an adoption tax credit that was worth $14,400 in 2021.
This year, the adoption tax credit is now $14,890. The adoption tax credit comes with many different rules and limitations, which you should study prior to claiming the tax credit.
Be sure to apply for an ATIN
If you do not have a Social Security number for the adopted child nor are you able to obtain one, consider applying for an adoption taxpayer identification number (ATIN) directly through the IRS. It will suffice as a temporary ID that the child can be identified with via the federal tax return, making it possible to identify him or her as you await the finalization of the domestic adoption.
If the adoption is between countries, the child being adopted will have either a resident alien card or a certification of citizenship. Use Form W-7A, which is also called the Application for Taxpayer Identification Number for Pending Adoptions. You can learn more about ATINs, including the ways you can use them, as well as how you can eventually replace ATINs with an official Social Security number.
Adoption can be an emotionally draining and mentally exhausting process as it involves quite a lot of details. Plus, you'll find yourself filling out paperwork and documents galore. but doing so is certainly worth the energy and the time that it takes. Be sure to talk with a tax adviser to better understand the adoption tax credit and how to gain access to the tax credits you're entitled to based on your situation.
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