Here’s how it worked out for the Wards: Over the past few years, the Wards have adopted five children. With each adoption, the Wards were allowed to deduct their qualifying expenses to adopt the children — the expenses could include reasonable adoption fees, court costs, attorney fees, traveling expenses and other expenses directly related to the adoption. Those expenses can really add up, as the typical private adoption costs about $30,000.
Parents who adopt special needs children may be able to claim the entire credit even if the expenses don’t reach the full amount. That worked out nicely for the Wards since all of the children they adopted were special needs — one has a serious heart condition requiring surgery, and the remainder participate in regular therapy and special classes for learning disabilities.
For nearly 15 years, the adoption tax credit was nonrefundable, so as the Wards have adopted their children, they simply rolled the excess credit to the next year. That all changed in 2010, when the credit became refundable. That meant the Wards could claim their prior year refund credits all at once during this tax season with the exception of one expired credit.