2017 Adoption Tax Credit & IRS Cost of Living Adjustments (COLAs) Just Announced

The IRS just released the 2017 Cost-of-Living Adjustments (COLAs) which include changes to the Adoption Tax Credit for special needs children and some qualified adoption expenses for children that are not special needs.

For employer-provided adoption assistance, the maximum that can be excluded from employee income under an employer-provided adoption assistance program increased by $110 from the 2016 amount to $13,570.

For individuals, the maximum adoption credit allowed for a child also increased by $110 from 2016 to $13,570.

The 2017 COLAs also allowed for $1,620 in additional modified AGI before 2017 phaseouts begin.   Employer exclusions and individual credits begin phaseouts for modified adjusted gross incomes greater than $203,540 and entirely phase out for individuals with modified adjusted gross incomes of $243,540 or more.

Note:  Even with an understanding of phase outs, you must consult with a qualified tax professional as there are differences in the amounts of exclusions/credits you may be able to receive dependent upon whether the adopted child is considered by the IRS as a child with special needs or a child without special needs (only qualified adoption expenses).

Additional Resources:  IRS COLA info here.


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