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Can you ‘double-dip’ on adoption expenses?

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in Small Business Tax

Q. Regarding the adoption credit, can my son still claim the credit if he is reimbursed by his company for some expenses? D.S., Cincinnati

A. It depends. You can’t claim the credit for the same expenses that your employer pays for under a tax-free adoption assistance program. However, if you have excess expenses that you pay for yourself, you can claim the credit for those outlays (assuming you meet all the rules for the credit).

For 2010, the maximum credit has been increased to $13,170, up from $12,150 last year. For 2010, the maximum amount of tax-free employer-paid adoption assistance is also $13,170. So you could conceivably claim a credit for up to $13,170 of qualified adoption expenses that you paid for yourself plus receive tax-free employer assistance that covers up to $13,170 of additional qualified expenses. But, as we said, you can’t claim both breaks for the same expenses.

Tip: Both the credit and the tax-free employer assistance deal phase out for higher-income individuals.

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