GAO - Government Accountability Office

09/09/2025 | News release | Distributed by Public on 09/09/2025 06:06

The Adoption Tax Credit Can Help Offset Expenses. But Many Don’t Know About It Image

There are also different requirements on how much of the credit you can claim based on the adoption type. For instance, under a "special needs" adoption, taxpayers can claim the full credit amount regardless of whether any expenses were paid. The definition of special needs under the adoption tax credit is a child who cannot or should not return to their biological parents' home and is unlikely to be adopted without assistance. Most public adoptions, particularly children in foster care, are considered a special needs adoption.

For all other types of adoptions, taxpayers may only claim qualified expenses.

Recently, there have been changes to the tax credit that will effect how parents can claim the credit. Starting next filing season, taxpayers will be able to receive up to $5,000 as a tax refund if the amount of their adoption credit is greater than their yearly tax bill. Prior to this change, for the last 12 tax years, the adoption tax credit had been nonrefundable, meaning it could only be applied to tax liabilities and no amount of the credit could be claimed as a cash refund.

What do some parents get wrong about the tax credit and how can IRS help?

Many parents may not know they are eligible for the adoption tax credit. Others who do know may inaccurately claim the credit or be unprepared to answer IRS's questions if audited.

The IRS provides information to help on its website, social media, newsletters, Adoption Tax Credit Form 8839 instructions, and more.

But we found that IRS doesn't consistently share this information with key partners like state adoption and foster care agencies. As a result, families that rely on these agencies for information throughout the adoption process may not learn about the tax credit or how to properly claim it.

Examples of Internal Revenue Service (IRS) Social Media Outreach for the Adoption Tax Credit for Filing Season 2024

Additionally, IRS's information is not always clear and consistent. For example, we found instructions that provided conflicting information for parents. This confusion may result in some parents missing out on thousands of dollars of tax credit. It could also result in taxpayers claiming a credit that they are ineligible for or claim an inaccurate amount. Others may be audited-a costly and time-consuming process-and eventually be responsible for unexpected tax bills.

We recommended that the IRS could help those interested in claiming the adoption tax credit by developing a comprehensive educational outreach plan. As part of this effort, we recommended that IRS take steps like working with stakeholders to better understand parents' needs and questions. This could help more parents understand and claim the tax credit they qualify for.

For more on the adoption tax credit, check out our new report.

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